NASDAQ:NWPX Northwest Pipe Q3 2024 Earnings Report $41.42 +0.22 (+0.53%) Closing price 04/17/2025 04:00 PM EasternExtended Trading$41.43 +0.01 (+0.02%) As of 04/17/2025 04:05 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Northwest Pipe EPS ResultsActual EPS$1.02Consensus EPS $0.85Beat/MissBeat by +$0.17One Year Ago EPS$0.58Northwest Pipe Revenue ResultsActual Revenue$130.20 millionExpected Revenue$126.80 millionBeat/MissBeat by +$3.40 millionYoY Revenue GrowthN/ANorthwest Pipe Announcement DetailsQuarterQ3 2024Date10/30/2024TimeAfter Market ClosesConference Call DateThursday, October 31, 2024Conference Call Time10:00AM ETUpcoming EarningsNorthwest Pipe's Q1 2025 earnings is scheduled for Wednesday, April 30, 2025, with a conference call scheduled on Thursday, May 1, 2025 at 10:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Northwest Pipe Q3 2024 Earnings Call TranscriptProvided by QuartrOctober 31, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Greetings, and welcome to the North West Pipe Company Third Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Scott Montross, CEO. Operator00:00:24Thank you. You may begin. Speaker 100:00:26Good morning, and welcome to Northwest Pipe Company's Q3 2024 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 30, 2024 at approximately 4 p. M. Speaker 100:00:49Eastern 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 from expectations. Please refer to our most recent Form 10 ks for the year ended December 31, 2023, 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. Speaker 100:01:25Thank you all for joining us today. I'll begin with a review of our Q3 performance and outlook for 2024. Aaron will then walk you through our financials in greater detail. Once again, we delivered strong Q3 results achieving new quarterly records in several key financial metrics. Our performance was driven by growth on the residential side of our precast business as well as ongoing strength in our steel pressure pipe business. Speaker 100:01:51Our consolidated net sales increased 9.7 percent year over year to $130,200,000 outpacing our strong second quarter and reflecting the highest quarterly revenue ever reported by the company. And the $27,000,000 of gross profit generated in the 3rd quarter was also a quarterly record. In addition, our focus on effective working capital management helped drive another quarter of strong cash flow generation. To further break down our segment level results, revenue from our Steel Pressure Pipe segment remained at near record levels totaling $85,900,000 and increasing 6.7% year over year in line with our expectations. Our performance primarily reflected continued high production levels through the ongoing strength in the bidding environment that has carried over into the second half of twenty twenty four as well as changes in project timing. Speaker 100:02:49Our SPP backlog including confirmed orders was $282,000,000 as of September 30, down from $348,000,000 as of June 30, 2024 and down from $335,000,000 as of September 30, 2023. Although our backlog declined, our SPP team has done a tremendous job executing on bids and projects. We attribute the 3rd quarter decline in backlog primarily to the timing of expected job awards, our mix in backlog and to a lesser extent lower steel prices. Nevertheless, we believe our backlog remains healthy and the bidding environment remains strong with a significant number of tons expected to bid in the Q4. As a result, we expect our backlog to improve through year end. Speaker 100:03:37Our 3rd quarter performance was partially offset by lower realized selling prices due primarily to lower raw material costs. While steel prices were fairly volatile throughout the course of the Q3, they appear to be stabilizing in the $700 per ton range with lead times standing at about 4 to 5 weeks. Now turning to our Precast segment. Precast revenue increased 15.8% year over year to a new quarterly record of $44,300,000 driven by strong operational execution by our teams in the field and a backdrop of continued robust demand on the residential side of our Geneva business, which resulted in strong production and shipment levels. However, reduced shipments on the non residential construction related portion of our precast business at Park offset some of this strength, mainly due to the continued impact of current interest rate environment on the commercial construction portion of the business. Speaker 100:04:34We expect this to reverse and become a tailwind as rates continue to come down. To a lesser extent, our production was also impacted by the severe weather events we experienced in Texas in July. Currently, in the non residential construction market for projects that are going into planning, which is generally about 12 months prior to breaking ground, the commercial and institutional segments are up 31% and 4% respectively versus last year's levels. As interest rates fall, the length of time between planning and breaking ground is expected to compress. As a result, we are expecting upcoming near term strength in the non residential market. Speaker 100:05:14On the pricing side, the residential part of our precast business has enacted multiple price increases throughout 2024 driven by strong demand that we've experienced at the Geneva locations. However, our non residential precast business experienced some downward pricing pressure as a result of the elevated interest rate environment and the negative impact it has had on the commercial construction demand. With the initial Fed 50 basis point rate cut in September and the additional cuts that are expected before year end, we expect the non residential construction market to strengthen in the near term. As of September 30, our precast order book totaled 57,000,000 dollars down modestly from $62,000,000 as of June 30, 2024, further reflecting the resilience of this segment as we enter the traditionally slower time of the year. And it was up from $52,000,000 as of September 30, 2023. Speaker 100:06:13Our consolidated gross profit for the Q3 increased 40% year over year to $27,000,000 a new quarterly gross profit record for the company, which resulted in a strong gross margin of 20.8%, up from 16.3% in the Q3 of 2023. This is the strongest quarterly gross margin we have reported for the current SPP and precast configuration of the company. Our SPP gross margin of 19.4 percent was strong, increasing by approximately 580 basis points over the prior year period and 40 basis points over the prior quarter, primarily due to high production volume with strong overhead absorption as well as changes in product mix. This in addition to the ongoing strength in the bidding activity we've been experiencing. Our pre cash gross margin of 23.5 percent improved by approximately 160 basis points over the prior year period and 140 basis points over the prior quarter, primarily resulting from the strength in the residential construction market as well as changes in product mix. Speaker 100:07:20Margins on the residential construction site at the Geneva location strengthened versus the year ago quarter. As indicated, non residential commercial construction market demand has been adversely affected by the high interest rate environment creating some margin compression. In addition, early third quarter severe weather related impacts on our production and shipping days not only reduced early third quarter revenue at the park facilities, but also reduced production levels leading to lower overhead absorption further impacting non residential margins. Next, I would like to provide an update on our precast product spread strategy to promote organic growth in the business. Year to date, we have bid on over $47,000,000 worth of projects outside of the state of Texas and booked approximately $8,000,000 worth of orders. Speaker 100:08:11As a result of our ongoing efforts to enhance capacity utilization at our Texas based precast plants to maximize overall efficiency and production volume. Further, we gained additional traction on product spread at the Geneva plants in Utah by booking approximately $1,700,000 of park related projects. Our goal is to book in excess of $2,000,000 worth of park related projects at Geneva in 2024. As previously noted, once the park precast products established at the Utah locations, we plan to expand our product spread strategy to additional current Northwest Pipe geographic locations. This is in the planning stage and is scheduled to occur over the next couple of years. Speaker 100:08:55Further to expanding our capacity, we are pleased to report that our investment in the new reinforced concrete pipe and manhole mill at our Salt Lake City, Utah facility is near completion. This will unlock additional production capacity and capabilities positioning the Geneva business for additional growth. In addition to our organic growth activities, we are continuing to actively evaluate M and A opportunities in the pre cash related space that would help accelerate progress in our pre cash strategy by increasing our manufacturing capabilities and production efficiencies and expanding our geographic reach and product portfolio. The ideal candidate would be accretive to our earnings, possess strong potential for organic growth, enhance our margins and deliver consistent positive cash flow generation. Properly execute our growth strategy, repaying debt we've occurred to finance the 2021 acquisition of Park USA remains a top strategic focus of our capital allocation philosophy. Speaker 100:09:56And in the absence of accretive M and A opportunities, we may opt to repurchase shares of our common stock. While we did not repurchase any shares during the Q3, we remain opportunistic in our approach. Since the initial authorization of our share repurchase in November of 2023, we bought back a total of 174,000 shares for $5,100,000 as of September 30. Before I conclude, I'd like to summarize our outlook for the Q4 of 2024. In our SPP business, we anticipate a stronger 4th quarter than we've seen in recent years, despite it generally being the slowest quarter of the year due to 2 major holidays as well as is expected weather related events. Speaker 100:10:43Nevertheless, we expect revenue and gross margins to be relatively strong for Q4 of a year, primarily related to mix of projects that we booked and their overall impact on production volume. We also expect backlog to remain strong by historical standards given the volume of expected steel pressure pipe bidding for the remainder of 2024. Further, we remain encouraged by the amount of activity we are seeing on our current and upcoming water transmission projects, which can be found detailed in our investor presentation on the Investor Relations portion of our website. We continue to expect a healthy bidding year in 2025 similar to 2024 levels. In the Precast business, we are expecting our 4th quarter revenue to be down sequentially from the record Q3 we just reported with relatively stable gross margins. Speaker 100:11:35We continue to believe in the strength of the precast business in the mid to long term, given the significant level of pent up demand, specifically for residential housing and a growing need for infrastructure spending in the U. S. And our growing market position. In summary, I'm very pleased with the strong operational and financial performance we delivered in the 3rd quarter. Thank you to all of our team members for your continued dedication to success and safety in the field as we execute our growth strategy in pursuit of enhanced shareholder and stakeholder value. Speaker 100:12:09Our performance continues to be bolstered by strong bidding environment in 2024 that is anticipated to remain elevated throughout the balance of the year and into 2025. Looking ahead, our priorities remain on 1, maintaining a safe workplace where our employees are proud to work 2, persistently focusing on margin over volume 3, continuing to implement cost reductions and efficiencies at all levels of the company 4, intensifying our focus on strategic acquisition opportunities to grow the company and 5, in the absence of M and A opportunities, returning value to our shareholders through opportunistic share repurchases. I will now turn the call over to Aaron, who will walk you through our financials in greater detail. Speaker 200:12:57Thank you, Scott, and good morning, everyone. Beginning with our Q3 profitability, consolidated net income was $10,300,000 or $1.02 per diluted share compared to $5,800,000 or $0.58 per diluted share in the 3rd quarter of 2023. Consolidated net sales increased 9.7 percent to $130,200,000 compared to $118,700,000 in the year ago quarter. Steel pressure pipe segment sales increased 6.7% to $85,900,000 compared to $80,500,000 in the Q3 of 2023. The improvement was driven by an 18% increase in tons produced resulting primarily from improved market demand in a continued strong bidding environment as well as changes in project timing. Speaker 200:13:44It was partially offset by a 9% decrease in selling price per ton due to lower raw material costs. Precast segment sales increased 15.8% to a new quarterly record of $44,300,000 compared to $38,200,000 in the Q3 of 2023. This was driven by a 35% increase in volume shift, which was partially offset by 14% decrease in selling prices resulting from changes in product mix. Our Geneva business continued its strong performance on resilient demand in Utah, while the headwinds for commercial construction demand in Texas continued, encumbering our park business that was also slowed by weather related delays. As a reminder, the products we manufacture are unique and therefore shipment volumes in the case of precast, production volumes in the case of steel pressure pipe and the corresponding average sales prices for both segments do not always provide comparable metrics between periods as they are highly dependent on the composition of each segment's product mix. Speaker 200:14:49Consolidated gross profit was also a record increasing 40 percent to $27,000,000 or 20.8 percent of sales compared to $19,300,000 or 16.3 percent of sales in the Q3 of 2023. SPP gross profit increased 52.4 percent to $16,600,000 or 19.4 percent of segment sales compared to gross profit of $10,900,000 or 13 point 6 percent of segment sales in the Q3 of 2023, primarily due to higher production volume resulting from improved market conditions. Precast gross profit increased 24% to $10,400,000 or 23.5 percent of precast sales from $8,400,000 or 21.9 percent of segment sales in the Q3 of 2023, primarily due to increased shipment volume, particularly in Utah. Selling, general and administrative expenses increased 13.1 percent to $11,600,000 or 8.9 percent of sales compared to $10,200,000 in the Q3 of 2023 or 8.7 percent of sales. Selling, general and administrative expenses increased 13.1% or $11,600,000 or 8.9 percent of sales compared to $10,200,000 in the Q3 of 2023 or 8.7 percent of sales. Speaker 200:16:16The increase was primarily due to higher incentive compensation expense. Our non cash incentive compensation expense in the Q3 of 2024 was $1,200,000 compared to $700,000 in the year ago quarter. For the full year of 2024, we now expect our consolidated selling, general and administrative expenses to be in the range of approximately $47,000,000 to 48,000,000 dollars Depreciation and amortization expense in the Q3 of 2024 was $5,200,000 compared to $4,000,000 in the year ago quarter. We expect depreciation and amortization expense to be approximately $19,000,000 in the full year of 2024. Interest expense increased to $1,500,000 from $1,200,000 in the Q3 of 2023 due primarily to higher interest rates and an increase in our average daily borrowings. Speaker 200:17:09The full year 2024, we expect interest expense to be approximately $6,000,000 Our 3rd quarter income tax expense was $3,700,000 resulting in an effective income tax rate of 26.3% compared to $2,000,000 in the prior year quarter or an effective income tax rate of 25.7%. Our tax rates for the 3rd quarters of 20242023 were impacted by non deductible permanent differences. We now expect our tax rate for the full year of 2024 to be within the range of 20% to 21%. The change in our expectation is due to the statute of limitations that have expired on uncertain tax positions during the Q4. Now I will transition to our financial condition. Speaker 200:18:00Net cash provided by operating activities $22,700,000 in the Q3 of 2024 compared to $16,900,000 in the Q3 of 2023 due to the company's improved profitability. Improving cash flows remains a key strategic focus of our business and critical for the execution of both our growth and stockholder return priorities. While our Q3 free cash flows improved, the working capital needs of our steel pressure pipe business can be highly variable between quarters and therefore we concentrate on the annual performance of this key metric. We continue to anticipate free cash flows to range between $19,000,000 $25,000,000 for the full year 2024. Our capital expenditures totaled $6,000,000 in the Q3 of 2024 compared to $4,800,000 in the prior year quarter. Speaker 200:18:52As a reminder, we anticipate completion of the new concrete pipe mill project in Salt Lake City by year end, which after successful commissioning is expected to improve production yields and efficiencies on reinforced concrete pipe and manholes we produce and sell out of that facility. We anticipate our total CapEx to be in the range of $20,000,000 to $22,000,000 for full year 2024, which includes approximately $8,000,000 of investment in our new reinforced concrete pipe mill and associated building and the remainder primarily for standard capital replacement. As of September 30, 2024, we had $60,700,000 of outstanding borrowings on our credit facility, leaving approximately $63,000,000 in additional borrowing capacity on our credit line. In summary, we're pleased to deliver another very strong quarter of financial performance and the consecutive quarterly records for consolidated gross profit. Our steel pressure pipe business is well positioned for the remainder of the year and into 2025 and our precast business returned a new quarterly revenue record for that segment. Speaker 200:20:03These achievements are made possible by our employees' exceptional execution. I would like to thank each of them for their commitment to safety as well as our shareholders for their continued support and trust in Northwest Pipe Company. I will now turn it over to the operator to begin the question and answer session. Operator00:20:20Thank you. We will now conduct a question and answer session. Our first question comes from Brent Thielman with D. A. Davidson. Operator00:20:48Please proceed. Speaker 300:20:51Hey, good morning. Speaker 100:20:53Good morning. Good morning, Brent. Speaker 300:20:55Hey, Scott or Aaron, just on the backlog for the quarter down 16% year on year. How much of that decline is just comparisons of lower steel prices versus just what you burned in the quarter in terms of volume? Speaker 100:21:14I think it's a little bit of a decline Brent. But right now it's waiting for some of these jobs awards that we've been notified that we're going to get are a little bit slower coming in. That's a piece of it. And it's just how things are bidding. And as we're looking at this, we expect the backlog actually to start going up through year end. Speaker 100:21:36And ultimately, with the way things were bidding earlier, we thought it was going to go down. So I think that the backlog is strong. What I would say about the pricing level, the steel costs are probably down for us about 22% versus where they were year over year, but the price is only down 9%. So the price is staying up there pretty good. It's just a matter of job timing being awarded and we feel pretty comfortable with the backlog that we're going to carry out at the end of this year and what we're going into with the bidding environment next year looks to be pretty similar. Speaker 100:22:15So and what I would say about the current bidding environment or the bidding levels, I mean these are okay years with the amount of tons that are bidding in the steel pressure pipe markets, but they're not huge years. And ultimately with the IIJA funding that's out there, we think that those numbers are going to really jump up as we get out to 'twenty six, 'twenty seven and 'twenty eight based on the amount of projects that are coming through. So I think we've got a pretty long runway with strong backlog in front of us. And the steel price is going to jump up and down. But I think the most important thing right now, Brent, is the margin on the steel pressure pipe side is responding positively, getting up to 19.4% even in an environment when it's just a okay bidding level in the environment and a lot of that's due to the consolidation that's happened in the business. Speaker 100:23:03So we're pretty comfortable with what's going on. Steel price is going to fluctuate and it seems like that there's this invisible barrier that's at around $700 a ton where it really doesn't get much lower than that where 25 years ago in the steel business you saw things drop off the cliff like a rock. You don't see that anymore. So it seems to get down to around $700 a ton and then start to bounce back up because we've seen steel price increase announcements coming out which will ultimately affect what the amount of backlog is too. Now that's a long winded answer on probably a relatively simple question that you asked, but I thought I'd get a bunch of that stuff in there for you. Speaker 300:23:43I appreciate it, Scott. Maybe just, I guess, a follow-up on the Scott, I mean, if everything held constant with steel prices, and I know they won't, how much of a revenue headwind do you have going into next year in SPP just from a pricing perspective? And I don't think that means any impact to your gross profit since it's essentially a pass through. But trying to get a sense of what kind of headwind you'd still have it in next year just from a pricing perspective? Speaker 100:24:16I think that if it stays constant to where it is right now, we're going through our annual planning process right now creating annual plan. I don't see much of a change from I mean, this is a huge year. I mean, this is a really big year for steel pressure pipe the way it's coming in. And you can do the numbers annualized and come out what it's going to be. But I think we're kind of looking at numbers that are right in the $300,000,000 plus range and that's without anything changing in the steel pricing. Speaker 100:24:47And if the steel price goes back up, obviously, that will carry more revenue and create not a better gross margin, but it will create more gross profit dollars. So I don't think we have a huge headwind with that right now, because we just don't see the steel price fall down to $3.45 or $3.50 a ton now. It stops at like 700 dollars And the pricing is relatively stable because the business has been consolidated down to really 3 major suppliers in the steel pressure price mark steel pressure pipe market. Us, Thompson and American Spiral Welds, so you have the capacity in the hands of fewer people. And ultimately, it's a more stable bidding environment because of it. Speaker 300:25:32Very good. Just last one, I mean, it's a meaningful turnaround in revenue and precast this quarter. I guess, taking all your commentary, it seems as though you think there's some sustainability in this trend going forward, just given what you're seeing out there in the markets, product spread, etcetera? Speaker 100:25:51Yes. I would say we're in a situation right now, Brent, where we're still not hitting on all cylinders with because the residential side of the business is off a little bit right now due to interest rates, right. There was a little bit of weather impact to the beginning of Q3, but the residential business has been off a little bit and that's or excuse me, the non residential business has been off a little bit and that's mainly at the park facilities. But what we're seeing now and I'll say this before what we're seeing going forward, we're seeing significant strength on the residential side of the business at the Geneva facilities. I mean, we're looking at numbers where they're almost twice as big in revenue is when we purchased them back in 2020 and the residential side is really, really strong. Speaker 100:26:40But going forward, I think we continue to see that kind of strength because if you look at a lot of the indexes out there, the total construction starts are only up about 2% right now. Residential is up about 6% and right now non residential is pretty flat again because of the interest rate impact. Well, the 50 basis point drop that the Fed did in September and the expectation of 25 basis point drops at the next two meetings are starting to create a little bit more momentum in the Dodge Momentum Index. And right now versus September last year, the Momentum Index is about 21% higher than it was in September of 'twenty three. And most of that is on the commercial side and a little bit higher on the institutional side, but the institutional side is held in quite well. Speaker 100:27:32But the commercial side with these data center construction and hotels are starting to pick up, all those things and all that indicates a pretty strong nonresidential market coming at us. So if we continue to have the strength that we're seeing in residential at the Geneva facilities and start hitting on all cylinders in the non residential market comes back strength wise. We expect that to continue to grow as we go into next year and beyond. So we see a lot of strength in that business right now. So I think there's some sustainability there and there's some growth plans there that you're going to continue to see that grow even before you're considering any M and A activity that we may be working on at this point. Speaker 100:28:17So I think there's good sustainability there. Speaker 300:28:21All right. Very good. I'll pass it on. Thanks guys. Speaker 100:28:24No problem. Thanks. Operator00:28:26The next question comes from Julio Romero with Sidoti and Company. Please proceed. Speaker 400:28:33Hey, good morning, Scott and Aaron. Speaker 200:28:35Hi, Leo. Good morning, Leo. Speaker 400:28:37Hey, morning. What do you guys attribute the resilience of the residential portion of FreeCast Speaker 100:28:452? I think it's the same thing that's been going on. It's the net migration into the states of Utah and in and around Utah and housing markets is very, very strong. And we've seen it. We were worried as we've talked before a couple of years ago about it falling off with the increase in the interest rates, but we just have not seen it. Speaker 100:29:06In fact, it's continued to get stronger and stronger. There's some pent up demand in the housing market because of when the interest rates were high, there isn't enough inventory on the market. So houses are still being built. And Utah and around Utah, Idaho is a pretty good place for people to move to and live. And that's really what we attribute the strength to. Speaker 100:29:30Plus I think it's we've got a really good management team at the Geneva facilities and they've been very good at executing growth in the market and focusing on getting the price up and things like that. And it's just a strong market and we're making sure that we're doing the right things in the market to continue to grow the business. Speaker 400:29:57Got it. That's helpful. And you expect you mentioned you expect the non residential portion of free cash to strengthen in the near term due to interest rates falling. Just trying to if you could help us put a finer point on the timing of that strengthening. Is that like a first half 'twenty five event, a second half 'twenty five event or maybe even 'twenty six? Speaker 400:30:18And then secondly, how much of that near term strengthening of non res should be from interest rates falling versus maybe an increase in public spending flowing through? Speaker 100:30:30Okay. So the first part was what piece again? What was the first part? Speaker 400:30:36Just trying to think of a finer point of the timing of when non res gets better like Speaker 100:30:43Yes. Is there maybe a first half Speaker 400:30:44of the event or Speaker 100:30:46Yes. Normally, Julio, when you're looking at these things in this momentum index, it's usually projects that are going into planning about 12 months before the project actually breaks ground or starts. But with the interest rates coming down, this the time that these things are coming to fruition starts to get a bit compressed because people have been waiting to do stuff for the interest rates to come down. So you're probably seeing we're starting to see the beginning of it right now where some of the yards of production of concrete at our park facilities are going up quarter over quarter versus last year. So it's starting to move up. Speaker 100:31:25So what you're probably seeing is a mid-twenty 5 or a little bit past that mid-twenty 5 event when it really starts to strengthen. And I think it's going to be it's going to strengthen slowly. And then what we're going to see is it really strengthen when we get out into mid to later 2025. And at that point, we expect to have both the residential and non residential hitting on all cylinders. What was the next part of that question? Speaker 400:31:54Yes. That's well, you answered the question I had even after that, which was the residential should stay resilient as the non res gets better and then you are kind of hitting on all cylinders going out. The second part of my question was really just how much of that near term strengthening of non res should be from interest rates falling, but also from an increase in public spending, IIGA funds flowing through etcetera? Speaker 100:32:22Yes. So for the really when we're talking about the non res and res, we're talking about the precast piece, right? So the interest rates are really, really going to drive that and it's really going to be more commercial. The non building residential side is really more of the IJA stuff or taking into account what that's going to do with the steel pressure pipe business. So we haven't even really seen any of that yet. Speaker 100:32:50That's I think all in front of us based on what we can see. So it's the interest rates are just kind of lighting the fire and the more they come down, the fire is going to rise and the business gets stronger and stronger. And for us on the residential side is as we talked about in the script, we have the Exact 2,500 facility getting ready to start up and what that does is it's going to increase our capacity and increase our efficiency in the residential market in and around Utah. And that's just going to lead to higher production capacity and higher revenues and margins in residential. So we see growth going into 25 percent on the precast side. Speaker 100:33:39And the increase in the non residential market can really, really I guess push that up as we go late into 2025. So the prospects really look strong. Speaker 400:33:50Great context there. And then maybe just last one for me would be on talking about the free cash flow a little bit. You had another strong quarter here even as steel pressure pipe continues to do well. And Aaron, I think you mentioned the working capital needs of SPP can be variable on a quarter to quarter basis. We saw the day sales pick up a little bit sequentially. Speaker 400:34:11Does that day sales figure kind of continue to trend upward as steel pressure pipe continues to do well? Speaker 200:34:20Yes. It does tend to go that direction, especially in the 2 larger quarters of the year, which is typically the second and the third quarter. Yes, it's not atypical for the 4th quarter's days to kind of fall off a little bit and to see a little bit more working capital efficiency come through in your Q4 free cash flow, which will be lifted up by a little bit of a drop there. Now our business levels aren't something right now that we're expecting to see as much of a Q4 fall off as we've seen in other years. We're actually expecting them to stay relatively elevated. Speaker 200:34:59So I'm not I think we'll get a little bit of it, Julio, in the next Q4, more working capital bounce in our free cash than we got in the Q2 compared to sorry, the Q3 compared to the Q3 of a year ago. But I think the biggest thing is really kind of propelling our cash flow outflows for this year is really our profitability. Speaker 100:35:22And another piece of that, Julio, is the thing that we've worked on with cash flow is making sure that we're mining the cash out of the steel pressure pipe business and that a big piece of that is getting paid for progress payments for steel pressure pipe, getting paid upfront for steel and anything we can get paid upfront with and that's really contributing to the cash flow too going forward along with the efficiency of how we're managing the cash now. So I think that that's such a focus because that's part of the goals this year and the variable compensation is really to drive a cash flow level for the company, which obviously we know means a lot and it means not maybe not quite as much as the profitability of the business, but it means a lot. Cash king, right? So the idea to get cash in is really being driven into the business now and the way we approach the business. And I think the team is responding well to getting that cash in and really bumping up the cash flow. Speaker 100:36:30That's going to continue to be a focus for us. Speaker 400:36:35Really helpful. Thanks again for taking the questions. Speaker 200:36:39Sure. The Operator00:36:41next question comes from Ted Jackson with Northland Securities. Please proceed. Speaker 500:36:46Thanks. Congratulations on another excellent quarter. Speaker 100:36:50Hey, Ted. Speaker 500:36:53First of all, I'm going to tell you that I have a couple of friends that have decamped from California and moved to Utah. So they're helping you out. They expect to get up the coast and they love moving to Utah. Speaker 100:37:05The more you can push that, the better we're going to be. Speaker 500:37:08So I'll trust you, man. Like their houses took a lot of concrete to build. They're big. On SPP and the backlog, you've put up a couple of quarters of really, really excellent margin. And if you look at it, you're up at like at the higher end of kind of the historicals for the margin you're generating out of that business. Speaker 500:37:33And I know some of that's capacity, utilization rates and such. But when we look or when you look into the backlog that you have, what's the margin profile for that? I mean, were we able to maintain that, call it 19% -ish margin in SPP in Q4? And then how would we think about that for 2025? Speaker 100:37:59Yes, I think the thing about the 4th quarters is weather events, right, is what are we going to have weather events, icing storms, things like that. And you got 2 major holidays in the 4th quarter. So generally, it's a little bit lower. So I don't know that the 4th quarter is going to be is indicative as to what we're going to see going forward. We think the margin is going to be strong like it's been going through this year. Speaker 100:38:24But we don't think that it's going to be like we're going to see it in 2025, right, because we're expecting production levels in business levels to be similar to 2024. There's been a lot of stuff bidding, a lot of stuff in the Q4. So the margins in backlog are very strong. But a really big thing is the overhead absorption, right. The amount of production that we've been getting has been relatively strong. Speaker 100:38:52Right now, I would tell you we're at about 65% capacity utilization our steel pressure pipe facilities and that is a pretty strong capacity utilization. So if we stay up at those levels, I think you see margins stay up like that and maybe even get a little bit higher. When you start putting multiple strong years together with demand, that's when you start seeing margins in the steel pressure pipe business that start beginning with a 2 and it being sustainable. And 2025 looks like it's going to be a decent bidding year or 2, but not like I think what we're going to see in 'twenty six, 'twenty seven and 'twenty eight with the IIJA funding. I think those are the years where you can see margins be very strong. Speaker 100:39:33And what I'll tell you is, we don't announce our results on a monthly basis, but we have seen months recently that have been over 20% margins in steel pressure pipe. So that's a good sign and it's a good sign for going forward, especially with the bidding that we expect to see. Speaker 500:39:54So if I were to take what you just told me consolidated down, if you take out the utilization, which I completely understand that the next couple of quarters, it's all seems like there's always something that happens and it's beyond your control. But that the business you have in pipeline and the outlook that you see for the next few years results in all else being equal, a better margin environment and it will push you if it comes to pass the way it looks like it might push you into, let's call it, sort of on an average basis, historical records. If you get into if you're starting to push regular margins north of 20%, I mean, that's the top of the top for you guys, isn't it? Speaker 100:40:42Yes. I think that's right. I think we've seen margins in the past and quarterly margins, Aaron, you have to correct me if I'm wrong, but I think we've seen them as high as 25% in a quarter when we had a lot of work going on. So but I think what you're saying is right, Ted. I think when you start getting over 20%, 2021%, 2022 that's probably about the top of it that we've seen. Speaker 100:41:08But we haven't seen an environment like this with IIJA funded jobs coming at us. And who knows? I mean, we you could see those margins get into the mid-20s again if all that hits like we think. Speaker 500:41:22Okay. I'm switching over to CapEx. So you had a big, big piece of CapEx during 2024 with the Geneva plant and the $8,000,000 that you put into the Salt Lake City expansion. When I think about 2025 CapEx, would you is there other projects like that, they're going to come in to keep CapEx from falling off or would we see CapEx drop down from what are you probably going to do, call it $20,000,000 to gain some of what I'm asking? When I think about CapEx, if you have I mean that's a really big project. Speaker 500:42:08I know you've had big projects in the past, but like when we see it come back down to like a $21,000,000 level where you're like $13,000,000 $14,000,000 Is there something else on deck that's going to keep it up around 20 Speaker 100:42:22No, I don't think it comes down to like a 12 or 13. But I think when we've looked at this going forward with the things that we're doing, I think in the area of 2016, 2017, 2018 is probably reasonable unless we have a big project like we did with the exact 2,500 at Salt Lake City. That project was a over a number of years was in excess of $20,000,000 so spent on that project. So ultimately, if you look at in the level in the area of depreciation minus a big project like that, it's probably right in the $16,000,000 $17,000,000 $18,000,000 range. Speaker 500:43:04Okay. And then, just circling over to the M and A, I know you guys have been looking hard, knocking around, trying to find stuff. I mean, you described your ideal acquisition and I hope you find because it sounded perfect. But is there something like that? Is there something like that that you're actually in process of discussion? Speaker 500:43:27I mean, we're getting to the point where I would say that most of the things that you wanted to get done with regards to bringing Geneva and Park into Northwest Pipe and kind of cross pollinating, if you would, for those businesses. They're well along. And I know it's not that you haven't, disdained doing any acquisitions, but ideally your thought to me had always been that it would be best that once you get this integration work done, that really have something kind of come in. And I think you're kind of at that point now. I mean, where what's the timeline of can we see something in 2025? Speaker 500:44:12I mean, is it that active? Or you're just knocking around trying to find it? Speaker 100:44:18Yes. We would like to have something by 2025, right? I mean we're always working on things. We're always in discussions with people on M and A. And it's an area of focus. Speaker 100:44:34And ultimately, we would like to have something done by 2020. That's what I hit this point. You're putting Speaker 500:44:46I'll let you go. So then my final question and I'll let you go, Scott, is just talking about backlog a bit. You always put forth the backlog number on a dollars basis, which is fine. But given the volatile and you touched on this a bit within the context of today's call. But the volatility within steel prices, could you offer some like color? Speaker 500:45:15I know you don't want to get into too much detail about it, about kind of what's the volume of backlog that you have relative to say 12 months ago and last quarter and kind of how you see it rebounding because you are clearly expecting it to rebound in the Q4 in Q4. But like this kind of something to kind of sort of apples to apples at Forest? Speaker 100:45:41Yes. So I think the way no, the way to look at it is, the volume right now is a little bit lower than it was. So part of the thing that makes up a backlog is when we have a lot of tunnel work in backlog, we refer to that as long fuse work because it's tons are in backlog that can be in there for sometimes 2 years before it actually turns into orders. Well, we don't have much of that tonnage in backlog right now. What we have in backlog is actionable and it's down a little bit from the place, the areas that you just asked about. Speaker 100:46:22But we are also waiting for tons to come in and hit the backlog which should pushing us back up toward where we've been tonnage wise as we get through the end of this year and early next year. So we're not we haven't really fallen off that much. And like I said, steel prices are down year over year for us and you looked at consumed steel prices about 22%. Our price is only off 9% year over year. So the prices are staying up pretty high. Speaker 100:46:50And so it's not quite apples to apples, but the tons are going to be pretty similar as we get through the end of this year, Ted, to those other periods that you asked about. Speaker 500:47:02Okay. Okay. That's a fair answer. Again, congrats on the quarter. It was impressive. Speaker 100:47:09It was good to talk to you. Operator00:47:11The next question comes from David Wright with Henry Investment Trust. Please proceed. Speaker 600:47:17Yes. Good morning. Speaker 100:47:19Good morning, David. Speaker 600:47:22David. Well, I'll offer my congratulations, dollars 10,000,000 net, you got your 20% margins. So you've been at it a long time and it's got to feel good to have all the cylinders filing. And thanks for that extensive discussion about SPP margins that Ted asked you about and that was super informative. I wanted to ask about, you've said that in precast the better, it sounded like Utah was really good. Speaker 600:48:00How would that contrast with how Texas was? Speaker 100:48:04Well, Texas has been lighter volumes, Ted or excuse me, David. So that's been down a little bit. So the margins are, God, probably on the residential side are at this point probably a few to several 100 basis points higher than the non residential side because of the amount of absorption that's going on in the higher level of business. And we're not quite hitting on all cylinders at this point because like I said, the non res is relatively light and that's those are the Park facilities and it's just starting to come back. So ultimately, when that comes back, we expect the margins at Park to be as good if not better than they are at the Geneva facilities because obviously it's more of a specialty product. Speaker 100:48:54So it is down though right now and the Geneva facilities are about I'd say a few to several 100 basis points higher at this point. Speaker 600:49:03Okay. And when you mentioned in the press release, you talk about increase in volume, decrease in selling price due to changes in product mix and precast. What products are you selling a lot of? Speaker 100:49:19Well, the Geneva products are a bigger part of the precast mix right now. So those are more infrastructure products that are generally carrying lower selling prices than what you see of the Par products. So that's part of that's a big part of the product mix. The other thing that we're seeing a lot of is culvert work, especially at in the Geneva facilities. And that culvert work is not a huge priced item, but it's a lot of concrete and it carries a really good margin. Speaker 100:49:50And so that's a little bit of what's affecting it too. But overall, it's really the higher mix of Geneva shipping in precast versus what we saw maybe a couple of years ago. And that's what I would attribute it to. Speaker 600:50:07Okay. Well, that's all I have. And again, congratulations and thank you. Speaker 100:50:12Great to talk to you, David. Operator00:50:14Thank you. At this time, there are no further questions in queue. I'd like to turn the call back to Scott Montross for closing comments. Speaker 100:50:21Yes. Just a few takeaways before we leave. Obviously, we expect to finish with a strong Q4, really at levels that are strong for a Q4 of the year. And as we've talked about in this call, we expect 2025 to be very similar to what we saw in 2024 on the steel pressure pipe side and we expect to continue to gain strength on the precast side. So we're positioned pretty strongly for the near term and midterm on both SPP and on the precast side. Speaker 100:50:56And ultimately, we're going to get some tailwinds from the IIAJ funded stuff or the work that's going to be funded by the infrastructure package. And it probably really kicks us into high gear as we get through 2025 into 2026. And again, we expect to see the pre cash business strengthen over that period of time. And we've talked about the product spread. The product spread is going fairly well and we're the business the Park product business at the Geneva facilities is continuing to grow. Speaker 100:51:30And ultimately, we're going to spread that Park products to other Northwest Pipe locations and spread that product across the country. So and if you look at and I've said this before, if you look at where we are in the just in the Q3 of 2024, we were at over $130,000,000 in revenue and $27,000,000 of gross profit in just the Q3. Compared to 2017, the full year of 2017 was $132,000,000 or $133,000,000 of revenue. And I think it was something about like $5,000,000,000 of gross profit. So obviously, the company has grown significantly over that period of time. Speaker 100:52:15And that's a path that we're going to remain on not only through organic growth with product spread to taking products to different locations, but also on the M and A side. So ultimately, we have a lot of runway in front of us and are going to continue to grow the company. And I just want to thank everybody on the call and all the employees for their support and dedication to this business. And we look forward to speaking to you again in March when we talk about full year results. So thank you very much. Operator00:52:49Thank 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.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallNorthwest Pipe Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Northwest Pipe Earnings HeadlinesNorthwest Pipe Company to Release First Quarter 2025 Financial Results on April 30thApril 16 at 5:42 PM | gurufocus.comNorthwest Pipe Company to Release First Quarter 2025 Financial Results on April 30th | NWPX ...April 16 at 4:43 PM | gurufocus.comWarning: “DOGE Collapse” imminentElon Strikes Back You may already sense that the tide is turning against Elon Musk and DOGE. Just this week, President Trump promised to buy a Tesla to help support Musk in the face of a boycott against his company. But according to one research group, with connections to the Pentagon and the U.S. government, Elon's preparing to strike back in a much bigger way in the days ahead.April 19, 2025 | Altimetry (Ad)An Intrinsic Calculation For Northwest Pipe Company (NASDAQ:NWPX) Suggests It's 33% UndervaluedApril 8, 2025 | finance.yahoo.comNorthwest Pipe Company Approves Executive Incentive GrantsApril 2, 2025 | tipranks.com3 Reasons NWPX is Risky and 1 Stock to Buy InsteadMarch 27, 2025 | finance.yahoo.comSee More Northwest Pipe Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Northwest Pipe? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Northwest Pipe and other key companies, straight to your email. Email Address About Northwest PipeNorthwest Pipe (NASDAQ:NWPX) Company, together with its subsidiaries, engages in the manufacture and supply of water-related infrastructure products in North America. It operates in two segments, Engineered Steel Pressure Pipe (SPP) and Precast Infrastructure and Engineered Systems (Precast). The SPP segment offers large-diameter and high-pressure steel pipeline systems for use in water infrastructure applications, which are primarily related to drinking water systems. Its products are also used for hydroelectric power systems, wastewater systems, seismic resiliency, and other applications. In addition, this segment makes products for industrial plant piping systems and certain structural applications. The Precast segment provides stormwater and wastewater technology products, precast, and reinforced concrete products, including reinforced concrete pipe, manholes, box culverts, vaults and catch basins, pump lift stations, oil water separators, biofiltration units, steel casing pipes, and bar-wrapped concrete cylinder pipes, as well as pipeline system joints, fittings, specialized components, and other environmental and engineered solutions. The company sells its water infrastructure products under ParkUSA, Geneva Pipe and Precast, Permalok, and Northwest Pipe Company brands primarily to installation contractors. Northwest Pipe Company was incorporated in 1966 and is headquartered in Vancouver, Washington.View Northwest Pipe ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Archer Aviation Unveils NYC Network Ahead of Key Earnings Report3 Reasons to Like the Look of Amazon Ahead of EarningsTesla Stock Eyes Breakout With Earnings on DeckJohnson & Johnson Earnings Were More Good Than Bad—Time to Buy? 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There are 7 speakers on the call. Operator00:00:00Greetings, and welcome to the North West Pipe Company Third Quarter 2024 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Scott Montross, CEO. Operator00:00:24Thank you. You may begin. Speaker 100:00:26Good morning, and welcome to Northwest Pipe Company's Q3 2024 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 30, 2024 at approximately 4 p. M. Speaker 100:00:49Eastern 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 from expectations. Please refer to our most recent Form 10 ks for the year ended December 31, 2023, 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. Speaker 100:01:25Thank you all for joining us today. I'll begin with a review of our Q3 performance and outlook for 2024. Aaron will then walk you through our financials in greater detail. Once again, we delivered strong Q3 results achieving new quarterly records in several key financial metrics. Our performance was driven by growth on the residential side of our precast business as well as ongoing strength in our steel pressure pipe business. Speaker 100:01:51Our consolidated net sales increased 9.7 percent year over year to $130,200,000 outpacing our strong second quarter and reflecting the highest quarterly revenue ever reported by the company. And the $27,000,000 of gross profit generated in the 3rd quarter was also a quarterly record. In addition, our focus on effective working capital management helped drive another quarter of strong cash flow generation. To further break down our segment level results, revenue from our Steel Pressure Pipe segment remained at near record levels totaling $85,900,000 and increasing 6.7% year over year in line with our expectations. Our performance primarily reflected continued high production levels through the ongoing strength in the bidding environment that has carried over into the second half of twenty twenty four as well as changes in project timing. Speaker 100:02:49Our SPP backlog including confirmed orders was $282,000,000 as of September 30, down from $348,000,000 as of June 30, 2024 and down from $335,000,000 as of September 30, 2023. Although our backlog declined, our SPP team has done a tremendous job executing on bids and projects. We attribute the 3rd quarter decline in backlog primarily to the timing of expected job awards, our mix in backlog and to a lesser extent lower steel prices. Nevertheless, we believe our backlog remains healthy and the bidding environment remains strong with a significant number of tons expected to bid in the Q4. As a result, we expect our backlog to improve through year end. Speaker 100:03:37Our 3rd quarter performance was partially offset by lower realized selling prices due primarily to lower raw material costs. While steel prices were fairly volatile throughout the course of the Q3, they appear to be stabilizing in the $700 per ton range with lead times standing at about 4 to 5 weeks. Now turning to our Precast segment. Precast revenue increased 15.8% year over year to a new quarterly record of $44,300,000 driven by strong operational execution by our teams in the field and a backdrop of continued robust demand on the residential side of our Geneva business, which resulted in strong production and shipment levels. However, reduced shipments on the non residential construction related portion of our precast business at Park offset some of this strength, mainly due to the continued impact of current interest rate environment on the commercial construction portion of the business. Speaker 100:04:34We expect this to reverse and become a tailwind as rates continue to come down. To a lesser extent, our production was also impacted by the severe weather events we experienced in Texas in July. Currently, in the non residential construction market for projects that are going into planning, which is generally about 12 months prior to breaking ground, the commercial and institutional segments are up 31% and 4% respectively versus last year's levels. As interest rates fall, the length of time between planning and breaking ground is expected to compress. As a result, we are expecting upcoming near term strength in the non residential market. Speaker 100:05:14On the pricing side, the residential part of our precast business has enacted multiple price increases throughout 2024 driven by strong demand that we've experienced at the Geneva locations. However, our non residential precast business experienced some downward pricing pressure as a result of the elevated interest rate environment and the negative impact it has had on the commercial construction demand. With the initial Fed 50 basis point rate cut in September and the additional cuts that are expected before year end, we expect the non residential construction market to strengthen in the near term. As of September 30, our precast order book totaled 57,000,000 dollars down modestly from $62,000,000 as of June 30, 2024, further reflecting the resilience of this segment as we enter the traditionally slower time of the year. And it was up from $52,000,000 as of September 30, 2023. Speaker 100:06:13Our consolidated gross profit for the Q3 increased 40% year over year to $27,000,000 a new quarterly gross profit record for the company, which resulted in a strong gross margin of 20.8%, up from 16.3% in the Q3 of 2023. This is the strongest quarterly gross margin we have reported for the current SPP and precast configuration of the company. Our SPP gross margin of 19.4 percent was strong, increasing by approximately 580 basis points over the prior year period and 40 basis points over the prior quarter, primarily due to high production volume with strong overhead absorption as well as changes in product mix. This in addition to the ongoing strength in the bidding activity we've been experiencing. Our pre cash gross margin of 23.5 percent improved by approximately 160 basis points over the prior year period and 140 basis points over the prior quarter, primarily resulting from the strength in the residential construction market as well as changes in product mix. Speaker 100:07:20Margins on the residential construction site at the Geneva location strengthened versus the year ago quarter. As indicated, non residential commercial construction market demand has been adversely affected by the high interest rate environment creating some margin compression. In addition, early third quarter severe weather related impacts on our production and shipping days not only reduced early third quarter revenue at the park facilities, but also reduced production levels leading to lower overhead absorption further impacting non residential margins. Next, I would like to provide an update on our precast product spread strategy to promote organic growth in the business. Year to date, we have bid on over $47,000,000 worth of projects outside of the state of Texas and booked approximately $8,000,000 worth of orders. Speaker 100:08:11As a result of our ongoing efforts to enhance capacity utilization at our Texas based precast plants to maximize overall efficiency and production volume. Further, we gained additional traction on product spread at the Geneva plants in Utah by booking approximately $1,700,000 of park related projects. Our goal is to book in excess of $2,000,000 worth of park related projects at Geneva in 2024. As previously noted, once the park precast products established at the Utah locations, we plan to expand our product spread strategy to additional current Northwest Pipe geographic locations. This is in the planning stage and is scheduled to occur over the next couple of years. Speaker 100:08:55Further to expanding our capacity, we are pleased to report that our investment in the new reinforced concrete pipe and manhole mill at our Salt Lake City, Utah facility is near completion. This will unlock additional production capacity and capabilities positioning the Geneva business for additional growth. In addition to our organic growth activities, we are continuing to actively evaluate M and A opportunities in the pre cash related space that would help accelerate progress in our pre cash strategy by increasing our manufacturing capabilities and production efficiencies and expanding our geographic reach and product portfolio. The ideal candidate would be accretive to our earnings, possess strong potential for organic growth, enhance our margins and deliver consistent positive cash flow generation. Properly execute our growth strategy, repaying debt we've occurred to finance the 2021 acquisition of Park USA remains a top strategic focus of our capital allocation philosophy. Speaker 100:09:56And in the absence of accretive M and A opportunities, we may opt to repurchase shares of our common stock. While we did not repurchase any shares during the Q3, we remain opportunistic in our approach. Since the initial authorization of our share repurchase in November of 2023, we bought back a total of 174,000 shares for $5,100,000 as of September 30. Before I conclude, I'd like to summarize our outlook for the Q4 of 2024. In our SPP business, we anticipate a stronger 4th quarter than we've seen in recent years, despite it generally being the slowest quarter of the year due to 2 major holidays as well as is expected weather related events. Speaker 100:10:43Nevertheless, we expect revenue and gross margins to be relatively strong for Q4 of a year, primarily related to mix of projects that we booked and their overall impact on production volume. We also expect backlog to remain strong by historical standards given the volume of expected steel pressure pipe bidding for the remainder of 2024. Further, we remain encouraged by the amount of activity we are seeing on our current and upcoming water transmission projects, which can be found detailed in our investor presentation on the Investor Relations portion of our website. We continue to expect a healthy bidding year in 2025 similar to 2024 levels. In the Precast business, we are expecting our 4th quarter revenue to be down sequentially from the record Q3 we just reported with relatively stable gross margins. Speaker 100:11:35We continue to believe in the strength of the precast business in the mid to long term, given the significant level of pent up demand, specifically for residential housing and a growing need for infrastructure spending in the U. S. And our growing market position. In summary, I'm very pleased with the strong operational and financial performance we delivered in the 3rd quarter. Thank you to all of our team members for your continued dedication to success and safety in the field as we execute our growth strategy in pursuit of enhanced shareholder and stakeholder value. Speaker 100:12:09Our performance continues to be bolstered by strong bidding environment in 2024 that is anticipated to remain elevated throughout the balance of the year and into 2025. Looking ahead, our priorities remain on 1, maintaining a safe workplace where our employees are proud to work 2, persistently focusing on margin over volume 3, continuing to implement cost reductions and efficiencies at all levels of the company 4, intensifying our focus on strategic acquisition opportunities to grow the company and 5, in the absence of M and A opportunities, returning value to our shareholders through opportunistic share repurchases. I will now turn the call over to Aaron, who will walk you through our financials in greater detail. Speaker 200:12:57Thank you, Scott, and good morning, everyone. Beginning with our Q3 profitability, consolidated net income was $10,300,000 or $1.02 per diluted share compared to $5,800,000 or $0.58 per diluted share in the 3rd quarter of 2023. Consolidated net sales increased 9.7 percent to $130,200,000 compared to $118,700,000 in the year ago quarter. Steel pressure pipe segment sales increased 6.7% to $85,900,000 compared to $80,500,000 in the Q3 of 2023. The improvement was driven by an 18% increase in tons produced resulting primarily from improved market demand in a continued strong bidding environment as well as changes in project timing. Speaker 200:13:44It was partially offset by a 9% decrease in selling price per ton due to lower raw material costs. Precast segment sales increased 15.8% to a new quarterly record of $44,300,000 compared to $38,200,000 in the Q3 of 2023. This was driven by a 35% increase in volume shift, which was partially offset by 14% decrease in selling prices resulting from changes in product mix. Our Geneva business continued its strong performance on resilient demand in Utah, while the headwinds for commercial construction demand in Texas continued, encumbering our park business that was also slowed by weather related delays. As a reminder, the products we manufacture are unique and therefore shipment volumes in the case of precast, production volumes in the case of steel pressure pipe and the corresponding average sales prices for both segments do not always provide comparable metrics between periods as they are highly dependent on the composition of each segment's product mix. Speaker 200:14:49Consolidated gross profit was also a record increasing 40 percent to $27,000,000 or 20.8 percent of sales compared to $19,300,000 or 16.3 percent of sales in the Q3 of 2023. SPP gross profit increased 52.4 percent to $16,600,000 or 19.4 percent of segment sales compared to gross profit of $10,900,000 or 13 point 6 percent of segment sales in the Q3 of 2023, primarily due to higher production volume resulting from improved market conditions. Precast gross profit increased 24% to $10,400,000 or 23.5 percent of precast sales from $8,400,000 or 21.9 percent of segment sales in the Q3 of 2023, primarily due to increased shipment volume, particularly in Utah. Selling, general and administrative expenses increased 13.1 percent to $11,600,000 or 8.9 percent of sales compared to $10,200,000 in the Q3 of 2023 or 8.7 percent of sales. Selling, general and administrative expenses increased 13.1% or $11,600,000 or 8.9 percent of sales compared to $10,200,000 in the Q3 of 2023 or 8.7 percent of sales. Speaker 200:16:16The increase was primarily due to higher incentive compensation expense. Our non cash incentive compensation expense in the Q3 of 2024 was $1,200,000 compared to $700,000 in the year ago quarter. For the full year of 2024, we now expect our consolidated selling, general and administrative expenses to be in the range of approximately $47,000,000 to 48,000,000 dollars Depreciation and amortization expense in the Q3 of 2024 was $5,200,000 compared to $4,000,000 in the year ago quarter. We expect depreciation and amortization expense to be approximately $19,000,000 in the full year of 2024. Interest expense increased to $1,500,000 from $1,200,000 in the Q3 of 2023 due primarily to higher interest rates and an increase in our average daily borrowings. Speaker 200:17:09The full year 2024, we expect interest expense to be approximately $6,000,000 Our 3rd quarter income tax expense was $3,700,000 resulting in an effective income tax rate of 26.3% compared to $2,000,000 in the prior year quarter or an effective income tax rate of 25.7%. Our tax rates for the 3rd quarters of 20242023 were impacted by non deductible permanent differences. We now expect our tax rate for the full year of 2024 to be within the range of 20% to 21%. The change in our expectation is due to the statute of limitations that have expired on uncertain tax positions during the Q4. Now I will transition to our financial condition. Speaker 200:18:00Net cash provided by operating activities $22,700,000 in the Q3 of 2024 compared to $16,900,000 in the Q3 of 2023 due to the company's improved profitability. Improving cash flows remains a key strategic focus of our business and critical for the execution of both our growth and stockholder return priorities. While our Q3 free cash flows improved, the working capital needs of our steel pressure pipe business can be highly variable between quarters and therefore we concentrate on the annual performance of this key metric. We continue to anticipate free cash flows to range between $19,000,000 $25,000,000 for the full year 2024. Our capital expenditures totaled $6,000,000 in the Q3 of 2024 compared to $4,800,000 in the prior year quarter. Speaker 200:18:52As a reminder, we anticipate completion of the new concrete pipe mill project in Salt Lake City by year end, which after successful commissioning is expected to improve production yields and efficiencies on reinforced concrete pipe and manholes we produce and sell out of that facility. We anticipate our total CapEx to be in the range of $20,000,000 to $22,000,000 for full year 2024, which includes approximately $8,000,000 of investment in our new reinforced concrete pipe mill and associated building and the remainder primarily for standard capital replacement. As of September 30, 2024, we had $60,700,000 of outstanding borrowings on our credit facility, leaving approximately $63,000,000 in additional borrowing capacity on our credit line. In summary, we're pleased to deliver another very strong quarter of financial performance and the consecutive quarterly records for consolidated gross profit. Our steel pressure pipe business is well positioned for the remainder of the year and into 2025 and our precast business returned a new quarterly revenue record for that segment. Speaker 200:20:03These achievements are made possible by our employees' exceptional execution. I would like to thank each of them for their commitment to safety as well as our shareholders for their continued support and trust in Northwest Pipe Company. I will now turn it over to the operator to begin the question and answer session. Operator00:20:20Thank you. We will now conduct a question and answer session. Our first question comes from Brent Thielman with D. A. Davidson. Operator00:20:48Please proceed. Speaker 300:20:51Hey, good morning. Speaker 100:20:53Good morning. Good morning, Brent. Speaker 300:20:55Hey, Scott or Aaron, just on the backlog for the quarter down 16% year on year. How much of that decline is just comparisons of lower steel prices versus just what you burned in the quarter in terms of volume? Speaker 100:21:14I think it's a little bit of a decline Brent. But right now it's waiting for some of these jobs awards that we've been notified that we're going to get are a little bit slower coming in. That's a piece of it. And it's just how things are bidding. And as we're looking at this, we expect the backlog actually to start going up through year end. Speaker 100:21:36And ultimately, with the way things were bidding earlier, we thought it was going to go down. So I think that the backlog is strong. What I would say about the pricing level, the steel costs are probably down for us about 22% versus where they were year over year, but the price is only down 9%. So the price is staying up there pretty good. It's just a matter of job timing being awarded and we feel pretty comfortable with the backlog that we're going to carry out at the end of this year and what we're going into with the bidding environment next year looks to be pretty similar. Speaker 100:22:15So and what I would say about the current bidding environment or the bidding levels, I mean these are okay years with the amount of tons that are bidding in the steel pressure pipe markets, but they're not huge years. And ultimately with the IIJA funding that's out there, we think that those numbers are going to really jump up as we get out to 'twenty six, 'twenty seven and 'twenty eight based on the amount of projects that are coming through. So I think we've got a pretty long runway with strong backlog in front of us. And the steel price is going to jump up and down. But I think the most important thing right now, Brent, is the margin on the steel pressure pipe side is responding positively, getting up to 19.4% even in an environment when it's just a okay bidding level in the environment and a lot of that's due to the consolidation that's happened in the business. Speaker 100:23:03So we're pretty comfortable with what's going on. Steel price is going to fluctuate and it seems like that there's this invisible barrier that's at around $700 a ton where it really doesn't get much lower than that where 25 years ago in the steel business you saw things drop off the cliff like a rock. You don't see that anymore. So it seems to get down to around $700 a ton and then start to bounce back up because we've seen steel price increase announcements coming out which will ultimately affect what the amount of backlog is too. Now that's a long winded answer on probably a relatively simple question that you asked, but I thought I'd get a bunch of that stuff in there for you. Speaker 300:23:43I appreciate it, Scott. Maybe just, I guess, a follow-up on the Scott, I mean, if everything held constant with steel prices, and I know they won't, how much of a revenue headwind do you have going into next year in SPP just from a pricing perspective? And I don't think that means any impact to your gross profit since it's essentially a pass through. But trying to get a sense of what kind of headwind you'd still have it in next year just from a pricing perspective? Speaker 100:24:16I think that if it stays constant to where it is right now, we're going through our annual planning process right now creating annual plan. I don't see much of a change from I mean, this is a huge year. I mean, this is a really big year for steel pressure pipe the way it's coming in. And you can do the numbers annualized and come out what it's going to be. But I think we're kind of looking at numbers that are right in the $300,000,000 plus range and that's without anything changing in the steel pricing. Speaker 100:24:47And if the steel price goes back up, obviously, that will carry more revenue and create not a better gross margin, but it will create more gross profit dollars. So I don't think we have a huge headwind with that right now, because we just don't see the steel price fall down to $3.45 or $3.50 a ton now. It stops at like 700 dollars And the pricing is relatively stable because the business has been consolidated down to really 3 major suppliers in the steel pressure price mark steel pressure pipe market. Us, Thompson and American Spiral Welds, so you have the capacity in the hands of fewer people. And ultimately, it's a more stable bidding environment because of it. Speaker 300:25:32Very good. Just last one, I mean, it's a meaningful turnaround in revenue and precast this quarter. I guess, taking all your commentary, it seems as though you think there's some sustainability in this trend going forward, just given what you're seeing out there in the markets, product spread, etcetera? Speaker 100:25:51Yes. I would say we're in a situation right now, Brent, where we're still not hitting on all cylinders with because the residential side of the business is off a little bit right now due to interest rates, right. There was a little bit of weather impact to the beginning of Q3, but the residential business has been off a little bit and that's or excuse me, the non residential business has been off a little bit and that's mainly at the park facilities. But what we're seeing now and I'll say this before what we're seeing going forward, we're seeing significant strength on the residential side of the business at the Geneva facilities. I mean, we're looking at numbers where they're almost twice as big in revenue is when we purchased them back in 2020 and the residential side is really, really strong. Speaker 100:26:40But going forward, I think we continue to see that kind of strength because if you look at a lot of the indexes out there, the total construction starts are only up about 2% right now. Residential is up about 6% and right now non residential is pretty flat again because of the interest rate impact. Well, the 50 basis point drop that the Fed did in September and the expectation of 25 basis point drops at the next two meetings are starting to create a little bit more momentum in the Dodge Momentum Index. And right now versus September last year, the Momentum Index is about 21% higher than it was in September of 'twenty three. And most of that is on the commercial side and a little bit higher on the institutional side, but the institutional side is held in quite well. Speaker 100:27:32But the commercial side with these data center construction and hotels are starting to pick up, all those things and all that indicates a pretty strong nonresidential market coming at us. So if we continue to have the strength that we're seeing in residential at the Geneva facilities and start hitting on all cylinders in the non residential market comes back strength wise. We expect that to continue to grow as we go into next year and beyond. So we see a lot of strength in that business right now. So I think there's some sustainability there and there's some growth plans there that you're going to continue to see that grow even before you're considering any M and A activity that we may be working on at this point. Speaker 100:28:17So I think there's good sustainability there. Speaker 300:28:21All right. Very good. I'll pass it on. Thanks guys. Speaker 100:28:24No problem. Thanks. Operator00:28:26The next question comes from Julio Romero with Sidoti and Company. Please proceed. Speaker 400:28:33Hey, good morning, Scott and Aaron. Speaker 200:28:35Hi, Leo. Good morning, Leo. Speaker 400:28:37Hey, morning. What do you guys attribute the resilience of the residential portion of FreeCast Speaker 100:28:452? I think it's the same thing that's been going on. It's the net migration into the states of Utah and in and around Utah and housing markets is very, very strong. And we've seen it. We were worried as we've talked before a couple of years ago about it falling off with the increase in the interest rates, but we just have not seen it. Speaker 100:29:06In fact, it's continued to get stronger and stronger. There's some pent up demand in the housing market because of when the interest rates were high, there isn't enough inventory on the market. So houses are still being built. And Utah and around Utah, Idaho is a pretty good place for people to move to and live. And that's really what we attribute the strength to. Speaker 100:29:30Plus I think it's we've got a really good management team at the Geneva facilities and they've been very good at executing growth in the market and focusing on getting the price up and things like that. And it's just a strong market and we're making sure that we're doing the right things in the market to continue to grow the business. Speaker 400:29:57Got it. That's helpful. And you expect you mentioned you expect the non residential portion of free cash to strengthen in the near term due to interest rates falling. Just trying to if you could help us put a finer point on the timing of that strengthening. Is that like a first half 'twenty five event, a second half 'twenty five event or maybe even 'twenty six? Speaker 400:30:18And then secondly, how much of that near term strengthening of non res should be from interest rates falling versus maybe an increase in public spending flowing through? Speaker 100:30:30Okay. So the first part was what piece again? What was the first part? Speaker 400:30:36Just trying to think of a finer point of the timing of when non res gets better like Speaker 100:30:43Yes. Is there maybe a first half Speaker 400:30:44of the event or Speaker 100:30:46Yes. Normally, Julio, when you're looking at these things in this momentum index, it's usually projects that are going into planning about 12 months before the project actually breaks ground or starts. But with the interest rates coming down, this the time that these things are coming to fruition starts to get a bit compressed because people have been waiting to do stuff for the interest rates to come down. So you're probably seeing we're starting to see the beginning of it right now where some of the yards of production of concrete at our park facilities are going up quarter over quarter versus last year. So it's starting to move up. Speaker 100:31:25So what you're probably seeing is a mid-twenty 5 or a little bit past that mid-twenty 5 event when it really starts to strengthen. And I think it's going to be it's going to strengthen slowly. And then what we're going to see is it really strengthen when we get out into mid to later 2025. And at that point, we expect to have both the residential and non residential hitting on all cylinders. What was the next part of that question? Speaker 400:31:54Yes. That's well, you answered the question I had even after that, which was the residential should stay resilient as the non res gets better and then you are kind of hitting on all cylinders going out. The second part of my question was really just how much of that near term strengthening of non res should be from interest rates falling, but also from an increase in public spending, IIGA funds flowing through etcetera? Speaker 100:32:22Yes. So for the really when we're talking about the non res and res, we're talking about the precast piece, right? So the interest rates are really, really going to drive that and it's really going to be more commercial. The non building residential side is really more of the IJA stuff or taking into account what that's going to do with the steel pressure pipe business. So we haven't even really seen any of that yet. Speaker 100:32:50That's I think all in front of us based on what we can see. So it's the interest rates are just kind of lighting the fire and the more they come down, the fire is going to rise and the business gets stronger and stronger. And for us on the residential side is as we talked about in the script, we have the Exact 2,500 facility getting ready to start up and what that does is it's going to increase our capacity and increase our efficiency in the residential market in and around Utah. And that's just going to lead to higher production capacity and higher revenues and margins in residential. So we see growth going into 25 percent on the precast side. Speaker 100:33:39And the increase in the non residential market can really, really I guess push that up as we go late into 2025. So the prospects really look strong. Speaker 400:33:50Great context there. And then maybe just last one for me would be on talking about the free cash flow a little bit. You had another strong quarter here even as steel pressure pipe continues to do well. And Aaron, I think you mentioned the working capital needs of SPP can be variable on a quarter to quarter basis. We saw the day sales pick up a little bit sequentially. Speaker 400:34:11Does that day sales figure kind of continue to trend upward as steel pressure pipe continues to do well? Speaker 200:34:20Yes. It does tend to go that direction, especially in the 2 larger quarters of the year, which is typically the second and the third quarter. Yes, it's not atypical for the 4th quarter's days to kind of fall off a little bit and to see a little bit more working capital efficiency come through in your Q4 free cash flow, which will be lifted up by a little bit of a drop there. Now our business levels aren't something right now that we're expecting to see as much of a Q4 fall off as we've seen in other years. We're actually expecting them to stay relatively elevated. Speaker 200:34:59So I'm not I think we'll get a little bit of it, Julio, in the next Q4, more working capital bounce in our free cash than we got in the Q2 compared to sorry, the Q3 compared to the Q3 of a year ago. But I think the biggest thing is really kind of propelling our cash flow outflows for this year is really our profitability. Speaker 100:35:22And another piece of that, Julio, is the thing that we've worked on with cash flow is making sure that we're mining the cash out of the steel pressure pipe business and that a big piece of that is getting paid for progress payments for steel pressure pipe, getting paid upfront for steel and anything we can get paid upfront with and that's really contributing to the cash flow too going forward along with the efficiency of how we're managing the cash now. So I think that that's such a focus because that's part of the goals this year and the variable compensation is really to drive a cash flow level for the company, which obviously we know means a lot and it means not maybe not quite as much as the profitability of the business, but it means a lot. Cash king, right? So the idea to get cash in is really being driven into the business now and the way we approach the business. And I think the team is responding well to getting that cash in and really bumping up the cash flow. Speaker 100:36:30That's going to continue to be a focus for us. Speaker 400:36:35Really helpful. Thanks again for taking the questions. Speaker 200:36:39Sure. The Operator00:36:41next question comes from Ted Jackson with Northland Securities. Please proceed. Speaker 500:36:46Thanks. Congratulations on another excellent quarter. Speaker 100:36:50Hey, Ted. Speaker 500:36:53First of all, I'm going to tell you that I have a couple of friends that have decamped from California and moved to Utah. So they're helping you out. They expect to get up the coast and they love moving to Utah. Speaker 100:37:05The more you can push that, the better we're going to be. Speaker 500:37:08So I'll trust you, man. Like their houses took a lot of concrete to build. They're big. On SPP and the backlog, you've put up a couple of quarters of really, really excellent margin. And if you look at it, you're up at like at the higher end of kind of the historicals for the margin you're generating out of that business. Speaker 500:37:33And I know some of that's capacity, utilization rates and such. But when we look or when you look into the backlog that you have, what's the margin profile for that? I mean, were we able to maintain that, call it 19% -ish margin in SPP in Q4? And then how would we think about that for 2025? Speaker 100:37:59Yes, I think the thing about the 4th quarters is weather events, right, is what are we going to have weather events, icing storms, things like that. And you got 2 major holidays in the 4th quarter. So generally, it's a little bit lower. So I don't know that the 4th quarter is going to be is indicative as to what we're going to see going forward. We think the margin is going to be strong like it's been going through this year. Speaker 100:38:24But we don't think that it's going to be like we're going to see it in 2025, right, because we're expecting production levels in business levels to be similar to 2024. There's been a lot of stuff bidding, a lot of stuff in the Q4. So the margins in backlog are very strong. But a really big thing is the overhead absorption, right. The amount of production that we've been getting has been relatively strong. Speaker 100:38:52Right now, I would tell you we're at about 65% capacity utilization our steel pressure pipe facilities and that is a pretty strong capacity utilization. So if we stay up at those levels, I think you see margins stay up like that and maybe even get a little bit higher. When you start putting multiple strong years together with demand, that's when you start seeing margins in the steel pressure pipe business that start beginning with a 2 and it being sustainable. And 2025 looks like it's going to be a decent bidding year or 2, but not like I think what we're going to see in 'twenty six, 'twenty seven and 'twenty eight with the IIJA funding. I think those are the years where you can see margins be very strong. Speaker 100:39:33And what I'll tell you is, we don't announce our results on a monthly basis, but we have seen months recently that have been over 20% margins in steel pressure pipe. So that's a good sign and it's a good sign for going forward, especially with the bidding that we expect to see. Speaker 500:39:54So if I were to take what you just told me consolidated down, if you take out the utilization, which I completely understand that the next couple of quarters, it's all seems like there's always something that happens and it's beyond your control. But that the business you have in pipeline and the outlook that you see for the next few years results in all else being equal, a better margin environment and it will push you if it comes to pass the way it looks like it might push you into, let's call it, sort of on an average basis, historical records. If you get into if you're starting to push regular margins north of 20%, I mean, that's the top of the top for you guys, isn't it? Speaker 100:40:42Yes. I think that's right. I think we've seen margins in the past and quarterly margins, Aaron, you have to correct me if I'm wrong, but I think we've seen them as high as 25% in a quarter when we had a lot of work going on. So but I think what you're saying is right, Ted. I think when you start getting over 20%, 2021%, 2022 that's probably about the top of it that we've seen. Speaker 100:41:08But we haven't seen an environment like this with IIJA funded jobs coming at us. And who knows? I mean, we you could see those margins get into the mid-20s again if all that hits like we think. Speaker 500:41:22Okay. I'm switching over to CapEx. So you had a big, big piece of CapEx during 2024 with the Geneva plant and the $8,000,000 that you put into the Salt Lake City expansion. When I think about 2025 CapEx, would you is there other projects like that, they're going to come in to keep CapEx from falling off or would we see CapEx drop down from what are you probably going to do, call it $20,000,000 to gain some of what I'm asking? When I think about CapEx, if you have I mean that's a really big project. Speaker 500:42:08I know you've had big projects in the past, but like when we see it come back down to like a $21,000,000 level where you're like $13,000,000 $14,000,000 Is there something else on deck that's going to keep it up around 20 Speaker 100:42:22No, I don't think it comes down to like a 12 or 13. But I think when we've looked at this going forward with the things that we're doing, I think in the area of 2016, 2017, 2018 is probably reasonable unless we have a big project like we did with the exact 2,500 at Salt Lake City. That project was a over a number of years was in excess of $20,000,000 so spent on that project. So ultimately, if you look at in the level in the area of depreciation minus a big project like that, it's probably right in the $16,000,000 $17,000,000 $18,000,000 range. Speaker 500:43:04Okay. And then, just circling over to the M and A, I know you guys have been looking hard, knocking around, trying to find stuff. I mean, you described your ideal acquisition and I hope you find because it sounded perfect. But is there something like that? Is there something like that that you're actually in process of discussion? Speaker 500:43:27I mean, we're getting to the point where I would say that most of the things that you wanted to get done with regards to bringing Geneva and Park into Northwest Pipe and kind of cross pollinating, if you would, for those businesses. They're well along. And I know it's not that you haven't, disdained doing any acquisitions, but ideally your thought to me had always been that it would be best that once you get this integration work done, that really have something kind of come in. And I think you're kind of at that point now. I mean, where what's the timeline of can we see something in 2025? Speaker 500:44:12I mean, is it that active? Or you're just knocking around trying to find it? Speaker 100:44:18Yes. We would like to have something by 2025, right? I mean we're always working on things. We're always in discussions with people on M and A. And it's an area of focus. Speaker 100:44:34And ultimately, we would like to have something done by 2020. That's what I hit this point. You're putting Speaker 500:44:46I'll let you go. So then my final question and I'll let you go, Scott, is just talking about backlog a bit. You always put forth the backlog number on a dollars basis, which is fine. But given the volatile and you touched on this a bit within the context of today's call. But the volatility within steel prices, could you offer some like color? Speaker 500:45:15I know you don't want to get into too much detail about it, about kind of what's the volume of backlog that you have relative to say 12 months ago and last quarter and kind of how you see it rebounding because you are clearly expecting it to rebound in the Q4 in Q4. But like this kind of something to kind of sort of apples to apples at Forest? Speaker 100:45:41Yes. So I think the way no, the way to look at it is, the volume right now is a little bit lower than it was. So part of the thing that makes up a backlog is when we have a lot of tunnel work in backlog, we refer to that as long fuse work because it's tons are in backlog that can be in there for sometimes 2 years before it actually turns into orders. Well, we don't have much of that tonnage in backlog right now. What we have in backlog is actionable and it's down a little bit from the place, the areas that you just asked about. Speaker 100:46:22But we are also waiting for tons to come in and hit the backlog which should pushing us back up toward where we've been tonnage wise as we get through the end of this year and early next year. So we're not we haven't really fallen off that much. And like I said, steel prices are down year over year for us and you looked at consumed steel prices about 22%. Our price is only off 9% year over year. So the prices are staying up pretty high. Speaker 100:46:50And so it's not quite apples to apples, but the tons are going to be pretty similar as we get through the end of this year, Ted, to those other periods that you asked about. Speaker 500:47:02Okay. Okay. That's a fair answer. Again, congrats on the quarter. It was impressive. Speaker 100:47:09It was good to talk to you. Operator00:47:11The next question comes from David Wright with Henry Investment Trust. Please proceed. Speaker 600:47:17Yes. Good morning. Speaker 100:47:19Good morning, David. Speaker 600:47:22David. Well, I'll offer my congratulations, dollars 10,000,000 net, you got your 20% margins. So you've been at it a long time and it's got to feel good to have all the cylinders filing. And thanks for that extensive discussion about SPP margins that Ted asked you about and that was super informative. I wanted to ask about, you've said that in precast the better, it sounded like Utah was really good. Speaker 600:48:00How would that contrast with how Texas was? Speaker 100:48:04Well, Texas has been lighter volumes, Ted or excuse me, David. So that's been down a little bit. So the margins are, God, probably on the residential side are at this point probably a few to several 100 basis points higher than the non residential side because of the amount of absorption that's going on in the higher level of business. And we're not quite hitting on all cylinders at this point because like I said, the non res is relatively light and that's those are the Park facilities and it's just starting to come back. So ultimately, when that comes back, we expect the margins at Park to be as good if not better than they are at the Geneva facilities because obviously it's more of a specialty product. Speaker 100:48:54So it is down though right now and the Geneva facilities are about I'd say a few to several 100 basis points higher at this point. Speaker 600:49:03Okay. And when you mentioned in the press release, you talk about increase in volume, decrease in selling price due to changes in product mix and precast. What products are you selling a lot of? Speaker 100:49:19Well, the Geneva products are a bigger part of the precast mix right now. So those are more infrastructure products that are generally carrying lower selling prices than what you see of the Par products. So that's part of that's a big part of the product mix. The other thing that we're seeing a lot of is culvert work, especially at in the Geneva facilities. And that culvert work is not a huge priced item, but it's a lot of concrete and it carries a really good margin. Speaker 100:49:50And so that's a little bit of what's affecting it too. But overall, it's really the higher mix of Geneva shipping in precast versus what we saw maybe a couple of years ago. And that's what I would attribute it to. Speaker 600:50:07Okay. Well, that's all I have. And again, congratulations and thank you. Speaker 100:50:12Great to talk to you, David. Operator00:50:14Thank you. At this time, there are no further questions in queue. I'd like to turn the call back to Scott Montross for closing comments. Speaker 100:50:21Yes. Just a few takeaways before we leave. Obviously, we expect to finish with a strong Q4, really at levels that are strong for a Q4 of the year. And as we've talked about in this call, we expect 2025 to be very similar to what we saw in 2024 on the steel pressure pipe side and we expect to continue to gain strength on the precast side. So we're positioned pretty strongly for the near term and midterm on both SPP and on the precast side. Speaker 100:50:56And ultimately, we're going to get some tailwinds from the IIAJ funded stuff or the work that's going to be funded by the infrastructure package. And it probably really kicks us into high gear as we get through 2025 into 2026. And again, we expect to see the pre cash business strengthen over that period of time. And we've talked about the product spread. The product spread is going fairly well and we're the business the Park product business at the Geneva facilities is continuing to grow. Speaker 100:51:30And ultimately, we're going to spread that Park products to other Northwest Pipe locations and spread that product across the country. So and if you look at and I've said this before, if you look at where we are in the just in the Q3 of 2024, we were at over $130,000,000 in revenue and $27,000,000 of gross profit in just the Q3. Compared to 2017, the full year of 2017 was $132,000,000 or $133,000,000 of revenue. And I think it was something about like $5,000,000,000 of gross profit. So obviously, the company has grown significantly over that period of time. Speaker 100:52:15And that's a path that we're going to remain on not only through organic growth with product spread to taking products to different locations, but also on the M and A side. So ultimately, we have a lot of runway in front of us and are going to continue to grow the company. And I just want to thank everybody on the call and all the employees for their support and dedication to this business. And we look forward to speaking to you again in March when we talk about full year results. So thank you very much. Operator00:52:49Thank 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.Read morePowered by