NWPX Infrastructure, Inc. Q3 FY2025 earnings call

• WTS segment saw record net sales driven by strong customer shipping requirements, project mix, and timing. Published first third-party verified Environmental Product Declaration for cement-mortar line welded steel pipe. • Precast segment had net sales growth with pricing discipline, notable strength in park-related nonresidential business. • Capital allocation strategy focuses on growth, strategic acquisitions, cost efficiencies, and returning value to shareholders. Repurchased approximately 186,000 shares in the third quarter. • Consolidated gross profit reached a record $32.2 million, with WTS gross profit at $22.1 million and margin at 21.3%, up year-over-year.

Water Transmission Systems (WTS) segment delivered record net sales of $103.9 million, a 20.9% increase year-over-year. Tons produced rose 14% year-over-year, with revenue per ton benefiting from trade policy dynamics and pricing strategies. Backlog including confirmed orders stood at $301 million at quarter end. Precast segment net sales reached $47.2 million, a 6.6% year-over-year increase. Shipment volumes declined modestly, but average selling price increased 8%. Precast order book closed the quarter at $55 million.

• Anticipate modest year-over-year growth in both revenue and margins in the precast business during the fourth quarter. • Expect revenue and margins for the Water Transmission Systems business to be similar to the year ago period. • Full year 2025 consolidated selling, general and administrative expenses estimated at approximately $52 million. • Anticipate free cash flow for full year 2025 to range between $32 million and $37 million, up from prior outlook.

• Macro factors such as trade policy uncertainty and elevated interest rates affecting the precast segment. • Seasonal factors including major holidays and severe weather events potentially impacting the fourth quarter performance.

Q: Julio Romero asked about stronger-than-anticipated customer shipping requirements in the WTS segment and its driver.

A: Scott Montross said production levels were strong, with high shipment volumes like 421 loads in September at Adelanto, CA plant and 272 loads in Saginaw plant. Contract assets and accounts receivable moved positively, showing shipments outpaced production.

Q: Edward Jackson inquired about utilization rates in WTS and margin potential.

A: Scott Montross said WTS facilities had high 60s to low 70s utilization, and margins could improve with higher annual tonnage over 200,000 tons.

Q: Jean Paul Ramirez asked about precast pricing and volume.

A: Scott Montross said precast pricing is being pushed forward in both Park and Geneva segments, with volume expected to grow in Park's nonresidential business and Geneva's nonresidential work.

Q: Julio Romero asked about Proposition 4 in Texas and WTS benefit.

A: Scott Montross said Texas Proposition 4 dedicating $20 billion to water infrastructure will benefit WTS, as Texas has been a big market for water transmission systems projects.

Q: Julio Romero asked about sustainability of WTS cash flow.

A: Scott Montross said focus on cash flow with senior compensation tied to it, and working capital management improved, making cash flow sustainable.