NWPX Infrastructure, Inc. Q4 FY2025 earnings call

2025 was an outstanding year for NWPX with record financial performance. Achieved record safety performance. Made targeted organic investments across footprint to expand capacity, enhance efficiency, etc. Pursued disciplined M&A opportunities, completed acquisition of Bouton Precast. Announced strategic leadership promotions. Focused on maintaining safe workplace, margin over volume, strategic acquisitions, cost efficiencies, and returning value to shareholders.

In 2025, WTS segment revenue totaled a record $350.9 million, up 3.8% year-over-year with increased margins. Its gross profit reached a record $67.1 million, up 7.2% from 2024, resulting in a gross margin of 19.1%. Precast revenue increased 13.3% year-over-year to $175.1 million. Its gross profit was $36.5 million, up 11.3% year-over-year, with a gross margin of 20.8%.

For 2026, expect higher revenue in WTS segment compared to Q1 2025 with higher margins despite weather-related seasonality. Anticipate full-year bidding levels in WTS relatively consistent with 2025. Expect precast business to be stronger in 2026 with higher revenue in Q1 2026 than Q1 2025 and improving margins. Anticipate total CapEx in 2026 to be in range of $20 to $24 million, free cash flow to range between $40 and $46 million.

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

A: No, I don't think. I think you see a relatively steady climb. You know, it's obviously a slow climb. over a period of time for both the water transmission stuff and the precast stuff. Quite frankly, just looking at water transmission, we're starting to see a year in 2026 that probably appears a little bit bigger than we thought it was going to be. We originally thought the 140-some-thousand-ton range, it looks like it's going to be in the 150 or so range. At this point, we're seeing heavy bidding in the first quarter. and obviously that translating into what we're projecting to be relatively strong backlog. In fact, I would say strong backlog as we carry our way through 2026 on the WTS side. On the precast side, I think the margins are certainly recovering. On the non-residential stuff, we're seeing the And then the momentum index going up, and we're seeing the business, specifically at Park, kind of follow after that. And the margins are starting to creep up to the point where they used to be before we saw a little bit of fall off in the non-residential market a couple years ago. We just see – I mean, we're in total, Brent, for both sides of the business, not only the water transmission piece – But the precast piece, we're seeing what we consider to be a very strong 2026.

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

A: Yeah, I think the thing about this, Brendan, it does a lot of the same stuff that Geneva does, right? Same kind of products. They do manholes, risers, RCP, you know, vaults and things of that. There probably will be a little bit of capital as we go, and we're dealing with a business that's probably $8 or so million of revenue as it sits right now. But we think they've got good bones to the business. They've got, obviously, their own batch plant. There's a couple batch plants that are there that are even still in boxes, which are nice. And we think with probably relatively limited capital, doubling the size of the business in the next two to three years is probably what we're going to see. And ultimately, what our thought process is in this is to kind of roll this under the Geneva umbrella, Brent, and really make it a fourth Geneva plant because of the similarity to the rest of the Geneva business. But, and I will say, the interesting thing about this is that it's about eight or nine acres, somewhere between eight or nine acres. It's actually the first property that we own on the precast side of the business, which is obviously something we covet going forward, too, for expanding on various properties.

Q: Good morning, Scott and Aaron. This is Justin on for Julio. Yeah, so congrats on the Bowdoin acquisition. Can you talk a bit about your interest in the Colorado area? And are there any roll-up opportunities in that market?

A: Yeah, I think the Colorado area is interesting, Justin, because really we're seeing quite a bit of expansion in Colorado. Normally, I think a lot of the expansion has been more toward the Denver County and Denver property. But we're now seeing the El Paso County part of Colorado, which is just north adjacent to to where the facility is that we bought with Bouton, being really the biggest construction market over the next few years that we're seeing in the state of Colorado. So we think that there's a lot of growth opportunity from the perspective of expansion of the business, just organically with the amount of stuff that's out there. And as far as other potential roll-up opportunities, I mean, there are things out there, but it's the same thing that we always say. They've got to be practical and they've got to be willing to want to transact. And really, that's the thing we're going to face, Justin, is people that are willing to transact. But this whole thing with adding a plant in Colorado goes along with our strategy of creating a beachhead in some place we want to be through a single plant and continuing to grow that way. And And while we're seeing a little bit of a dearth of availability of other precast assets in the market, we will continue to do that to grow our business as we go forward.

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

A: Yeah, I think you originally asked was it towards specifically NWPX or was it WTS? What I would say is when the data center boom really began, we saw a little bit of activity around the WTS piece. I mean, there's constantly water resources under – under demand for different areas. So it's really hard to get a handle for the WTS piece, but we've seen a couple associated with it. What I would tell you is that we have seen significantly more associated with data center-related stuff on the precast side of our business. And, in fact, I was kind of, oh, my God, shocked, you know, because we cover this once a month with the different – business units, precast and water transmission. And right now, we have somewhere in the area of about 12 projects that are either things that we've produced and shipped or we're in the process of making or we're waiting for POs on that are data center-related projects that are out there that are really several million dollars worth of work that we see that's in the data center realm. The issue is we can't really say that much about it because they're pretty secretive, and they're having us sign NDAs. But I think this is kind of the theme that you can go with. Data centers have a water management problem, you know, intrinsically. One, moving water, right, just moving water, which what we do is we allow them to move water by supplying pump lift stations from our various precast plants. Water distribution, like measuring water in and out of buildings with meter vaults and things like that. Wastewater solutions where we might need to divert wastewater to different areas for treatment and so on and so forth. And then diverter valves with moving waters to different segments of the facilities. This is what we do. We provide those kind of products to be able to do that at data centers. And this stuff is all prepackaged from us, right? This is what we do at Park USA because really Park has the biggest piece of what we're seeing on the data center side. And quite frankly, a lot of work we're doing, we have a product development group that's at Park USA. A lot of what they're doing is, is developing products and helping develop products that serve some of the needs of these data centers that are being constructed, a lot of which are around Texas. And some of it is, I guess it's kind of innovation on the fly because there's different needs for the different data centers, so we're working through developing this stuff. And I think the most interesting thing is is that, You know, the pricing on these is not really an issue. It's really the speed of delivery that you can get it to them. So very good pricing on the data center work, too. So that's probably a little bit more than you wanted on it, but that's kind of what's going on around this.

Q: Yeah, very exciting, and thanks for the call again. And I believe you just mentioned that there were 12 projects. So just curious, were any of those projects included in the order book for the fourth quarter?

A: Yeah, we've seen some of those in the fourth quarter order book, yeah.

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

A: Yeah, we'll book the purchase price through the line of credit and hopefully pay that down relatively quickly. From the cash flow statement perspective, Ted, yeah, the line of Financing itself will be in the financing section. Obviously, the investment in Bouton will be shown up in the investing section.

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

A: Yeah, I mean, a lot of it, Ted, is really, even before you get to like the ERPN systems and things like that, you really kind of focus on, you know, culture and getting things that are most core to our culture, which, you know, as we've talked about, has been safety. So I know we have some people that have been traveling already to start that process. You know, you make that migration and then you start thinking about how fast you can kind of get them into the fold for reporting numbers and our process. our thought process on that is really to try to integrate them pretty quickly into a developed system that we already have for the Geneva business. So because of the familiarity with the Geneva team with that system, and like Scott said earlier, you know, that team's responsibility for this integration and the eventual growth of this business, which we expect to be pretty dramatic, you know, we're getting them built in you know, by about the middle of the second quarter will be a good pace to not overindicate the employees that we have on, you know, the new employees that we have in Colorado, but also to be mindful of the needs that we'll have as, you know, getting them to be able to report as a part of a public company. That will really kind of be the focus, and a lot of calories will be expended to get them integrated in and part of the fold. But you don't see much of a heavy lift to bring these guys in. It's not going to be like, you know, the – I mean, actually, they're kind of some of the rigmarole you had with regards to PARC.

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

A: Yeah, I think the idea is that the organic growth piece of the business and expanding on the plant in Tracy, California, the one in Atalanto, California, and some of these other plants into the pre-cash business is kind of top of mind with the expansion on the organic side. You know, because as we look at, and we've talked about this, as we look at the potential for acquisitions and M&A stuff, I mean, it's kind of, they're kind of few and far between right now. So without those there, we will look to step on the gas for our organic growth. And, Ted, we'll continue to look at areas where we can find single plant opportunities where we can create a beachhead and grow the company in areas where we want to grow. So I think that's going to be the main focus of what we're doing as we move forward. And then ultimately, I think we always have a situation where we'll be looking to potentially buy stock back and continue to provide value to the shareholders when things are relatively slow on either the organic growth side or the M&A side. So we're going to continue to do that to create value. So that really, I think, is the plan and keep our debt low and our powder relatively dry so that when something comes up and it eventually will come up that's kind of a transformative situation that we're ready to be able to do it.

Q: My last question, Aaron, is just a little tweak for me, but can you give me, you know, a percentage of steel as it was for cost of goods for the fourth quarter?

A: Yeah, I mean, we're still, let's see here, let me pull up that number, Ted. You know, we were about 28% for the year and a little less than that for the fourth quarter. Ted, we actually – for the quarter. You broke up. You said what for the quarter? About 25% for the quarter.

Q: Just a couple things and a couple takeaways as we wrap up here. Obviously, 2025 was a record year for NWPX. I think the thing besides the financial metrics and the operational performance, I think the strategic priorities that we continue to push The thing that we're most proud of for the year is the continued improvement in the safety performance. And that is a big part of our culture at the company. It's going to continue to be. Looking at the water transmission business, bidding is very healthy right now. We see a strong bidding environment in the first quarter and maybe a little bit larger demand in 2026 than we originally thought as we were heading into the year. And we've got a precast platform that really is continuing to grow. And now a non-residential piece that's performing well with the margins continuing to move up the way we thought they were going to move up. And, you know, we continue to make progress in our long-term strategy. The acquisition of Boughton's Precast, adding to the precast side of the business and continuing to grow there with organic growth potential there in different parts of the company, we're going to continue to push that forward. and capture growth as we move forward. I think the biggest thing is looking ahead into 2026. We have strong order books in both segments. And in really, you know, focusing on the first quarter, despite some of the weather-related impacts that we saw earlier in the year, which, you know, quite frankly resulted in some downtime early in the first quarter for us, we are expecting to see a first quarter increase in both the WTS and the precast side of the business than is stronger than we saw in 2024 and probably stronger than we've seen in the last few years. So, and I think the leadership team, you know, we've had some retirements. Miles Britton, who I've worked with and around for 29 years, who we'll miss greatly, obviously is, is heading into his retirement years, and we congratulate him on that. And I think the people that are coming up and replacing him are strong and create even more strength as we move forward growing the company in the future. And we're confident in the opportunities ahead and remain focused discipline on execution, safety, and delivering long-term value to shareholders, And, you know, I think in the final closing, with what we're seeing in front of us now for 2026 is what we would term as a very strong 2026. So thank you, and we will see you again in late April. So thank you very much. Thank you.