Q3 2025 NWPX Infrastructure Earnings Call
Speaker #1: The .
Speaker #2: Greetings and welcome to the . New infrastructure . Third quarter 2020 Earnings Call . At this time , all participants are in a listen only mode .
Speaker #2: A question and answer session will follow the formal presentation . If anyone should require operator assistance during the conference , please press Star Zero on your telephone keypad .
Speaker #2: As a reminder , this conference is being recorded . I would now like to turn the conference over to your host today , Mr. Scott Montross , CEO .
Speaker #2: Thank you, sir. You may begin.
Speaker #3: Good morning and welcome to Northwest Pipe Co Company's third quarter 2020 earnings conference call . My name is Scott Montross and I am president and CEO of the company .
Speaker #3: 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 the 29th , 2025 , at approximately 4 p.m.
Speaker #3: Eastern Time . This call is being webcast and it is available for replay . As we begin , I'd like to remind everyone that the statements made on this call regarding our expectations for the future are forward looking statements and actual results could differ materially .
Speaker #3: Please refer to our most recent form 10-K for the year ended December 31st , 2020 . Four , and in our other SEC filings for a discussion of such risk factors that could cause actual results to differ materially from our expectations .
Speaker #3: We undertake no obligation to update any forward looking statements . Thank you all for joining us today . I'll begin with a review of our third quarter performance and share our updated outlook for the remainder of 2025 .
Speaker #3: Aaron will then walk through our financials in greater detail . We're proud to report another quarter of record setting results , delivering the highest quarterly revenue , gross profit in EPs , and our company's history .
Speaker #3: Consolidated net sales reached 151.1 million , representing growth of 13.4% sequentially and 16% year over year . Gross margin expanded by 230 basis points sequentially to 21.3% .
Speaker #3: EPs grew to $1.38 per share , up 35% versus the prior year period . And we generated over $21 million in operating cash flow .
Speaker #3: During the quarter, these strong results underscore our disciplined execution against our strategic priorities and the sustained demand across both our water transmission systems and precast segments.
Speaker #3: Let's begin with our segment , which delivered record net sales of 103.9 million , a 20.9% increase year over year . This performance was fueled by favorable market dynamics , including stronger than expected customer shipping requirements , project mix and timing , tons produced rose 14% year over year , driven by sustained customer demand , while revenue per ton benefited modestly from trade policy dynamics and disciplined pricing strategies .
Speaker #3: Importantly , while our strong cash flow generation in the third quarter can be attributed to collective efforts of the entire company , the business was a notable contributor .
Speaker #3: We saw this trajectory throughout 2025 with improving cash flow through the first nine months of this year versus 2024 . This builds on the significant improvements we've achieved over the last few years .
Speaker #3: Fitting activity remained robust throughout the quarter , the expect even greater momentum heading into the fourth quarter . At quarter end , our backlog , including confirmed orders , stood at 301 million .
Speaker #3: While this reflects a sequential decline from the 348 million in June due to the elevated shipping activity , it marks an increase from the 282 million a year ago .
Speaker #3: We anticipate backlog levels will remain above 300 million through year end , supported by what we expect to be the strongest bidding quarter of the and we year .
Speaker #3: In addition , as part of our commitment to environmental stewardship , we recently published our first third party verified Environmental Product Declaration , or EPD , for cement mortar line welded steel pipe .
Speaker #3: The EPD measures embodied carbon and overall product life cycle impacts and help us meet by Lane and other state level transparency requirements . It also helps differentiate us from competitors in sustainability driven bids .
Speaker #3: This milestone underscores our dedication to transparency and sustainability in infrastructure development . For additional details on water transmission projects underway at Now , I encourage you to review our investor presentation available on our website .
Speaker #3: Turning to precast segment . Our net sales reached 47.2 million , marking a 6.6% year over year increase in landing . Just shy of the record set last quarter .
Speaker #3: While shipment volumes declined modestly , an 8% increase in average selling price reflects our pricing discipline . We saw notable strength in our park related non-residential business , which has navigated persistent macroeconomic headwinds , including trade policy uncertainty and elevated interest rates .
Speaker #3: Third quarter results reflect early signs of stabilization and improving trajectory in this business . Residential activity at Geneva moderated slightly during the quarter , partially offsetting gains .
Speaker #3: Our precast order book closed the quarter at $55 million, in line with recent levels and demonstrating consistent stability over the past several quarters.
Speaker #3: Looking ahead , we anticipate improved demand and accelerated project starts as interest rates ease on a consolidated basis , gross profit reached a record 32.2 million , representing a margin of 21.3% , up 50 basis points from 20.8% in the third quarter of 2020 .
Speaker #3: For water transmission systems , gross profit reached 22.1 million , with a margin of 21.3% , up approximately 190 basis points year over year and 350 basis points sequentially .
Speaker #3: This margin expansion reflects strong customer demand , favorable project pricing , and consistent operational execution , all while sustaining a healthy backlog . Precast gross profit totaled 10 million , down modestly from both second quarter and the third quarter of 2020 .
Speaker #3: Four , with gross margins that were flat with the prior quarter . Margins were temporarily impacted by mix shifts at Geneva and increased depreciation associated with new equipment investments .
Speaker #3: Production volumes rose year over year , with Park up double digits in Geneva up high . Single digits . Absorption rates are beginning to improve , and we anticipate margin recovery as non-residential demand continues to build momentum within the non-residential portion of our precast business is showing encouraging signs of recovery and is expected to contribute positively to our margins .
Speaker #3: Let me now turn to our capital allocation strategy . Growth remains our top priority in the third quarter . We continued advance our precast product spread strategy across multiple levels .
Speaker #3: First , optimizing capacity at our park plants by booking orders outside of Texas . Second , producing and shipping park products from Geneva .
Speaker #3: Third , producing and shipping Geneva products from locations and fourth , expanding precast related offerings to additional Northwest legacy locations , which includes water transmission systems , plants we currently have two water transmission systems plants that are in the process of getting their National Precast Concrete Association certification .
Speaker #3: We booked 3.3 million in precast product spread orders in the third quarter , and our full year goal remains to book over 12 million in product park spread projects outside of Texas .
Speaker #3: We also made targeted organic investments , including the installation of a catch basin machine at our Orem plant for Geneva , which will expand our production capabilities .
Speaker #3: Additionally , we are investing in new forms at our water transmission systems , plants to support precast production and further advance our product spread strategy .
Speaker #3: On the M&A front , we continue to evaluate acquisition opportunities in the precast space , including single plant candidates that would expand our geographic reach and capabilities .
Speaker #3: Our acquisition criteria remains disciplined and we are actively exploring several options . Other capital priorities include paying down debt and returning value to shareholders .
Speaker #3: During the third quarter , we repurchased approximately 186,000 shares at an average price of $42.90 , totaling 8 million . In summary , we remain on track to deliver a record year in 2025 , and we are well positioned for continued momentum in 2026 .
Speaker #3: Looking ahead , we're expecting to see a normal fourth quarter due to seasonal factors such as two major holidays , but more importantly , severe weather related events , which we have a lot of experience with over the last few years .
Speaker #3: In the fourth quarter , we anticipate modest year over year growth in both revenue and margins in our precast business and revenue and margins for the water transmission systems business to be similar to the year ago period .
Speaker #3: Our record setting performance throughout the year underscores the strength and resilience of our business model . The durability of our end markets and the exceptional commitment of our employees who continue to drive consistent execution across both segments .
Speaker #3: As always , our priorities remain clear one maintaining a safe and rewarding workplace two focusing on margin over volume three intensifying our pursuit of strategic acquisitions four .
Speaker #3: Implementing cost efficiencies across the organization and five returning value to our shareholders . When M&A opportunities are limited . Thank you to our entire team for your continued dedication and execution .
Speaker #3: I will now turn it over to Erin , who will walk you through our financials in greater detail .
Speaker #4: Thank you , Scott , and good morning , everyone . As Scott mentioned , we delivered record setting results this quarter , achieving the highest quarterly revenue gross profit and earnings per share in our company's history .
Speaker #4: In particular , the water transmission Systems segment's performance was exceptional , benefiting from several tailwinds , including higher than expected volume as well as cost efficiencies realized on improved plant utilization and favorable costing against our project estimates .
Speaker #4: We believe that shifts in the competitive landscape , combined with a favorable demand environment , have created conditions where strong quarterly results , such as those seen in the third quarter , are occasionally achievable .
Speaker #4: However , we do not consider this level of performance to represent a new baseline for the segment . I'll now turn to our third quarter profitability .
Speaker #4: Consolidated net income was $13.5 million , or $1.38 per diluted share , compared to $10.3 million , or $1.02 per diluted share , in the third quarter of 2020 .
Speaker #4: For this is the highest earnings per share posted in the company's history outside of the third quarter of 2018, which was elevated by a one-time 22.
Speaker #4: Million non-cash gain on bargain purchase associated with our acquisition of Ameron Water Group . Our results since that acquisition , including the record results achieved in the third quarter of 2025 , serve as continued validation that of that , acquisitions , positive contributions to the organization .
Speaker #4: Our third quarter consolidated net sales increased 16% to a record $151.1 million , compared to $130.2 million in the year ago quarter . Sales for the water transmission systems segment increased 20.9% to a record $103.9 million , compared to $85.9 million in the third quarter of 2020 .
Speaker #4: For the increase was driven by a 14% increase in tons produced resulting from changes in project timing and a 6% increase in selling price per ton due to changes in product mix .
Speaker #4: Pre-cast segment sales in the third quarter increased 6.6% to $47.2 million , compared to $44.3 million a year ago . Our performance was driven by an 8% increase in selling prices due to changes in product mix , which was partially offset by a 2% decrease in volume shipped .
Speaker #4: As a reminder , the products we manufacture are unique shipment volumes . In the case to pre-cast and production volumes in the case of and the corresponding average sales prices for both segments do not always provide comparable metrics between periods , which are highly dependent on the composition of each segment's product mix .
Speaker #4: Our third quarter consolidated gross profit increased 19% to 32.2 million , or 21.3% of sales , compared to 27 million , or 20.8% of sales , in the third quarter of 2020 .
Speaker #4: For water transmission systems , gross profit increased 33% to a record 22.1 million , or 21.3% of segment sales , compared to gross profit of 16.6 million , or 19.4% of segment sales , in the third quarter of 2020 .
Speaker #4: For primarily driven by higher pricing due largely to changes in product mix as well as higher production volumes and associated operational efficiency gains .
Speaker #4: Precast gross profit decreased 3.4% to 10 million , or 21.3% , of segment sales , from 10.4 million , or 23.5% of segment sales , in the third quarter of 2020 .
Speaker #4: Four , primarily due to changes in product mix . Selling , general and administrative expenses increased 13.2% to 13.1 million , compared to 11.6 million in the third quarter of 2020 .
Speaker #4: Four . Due to higher compensation and benefits expense . However , as a percentage of sales , SNA improved to 8.7% from 8.9% in the prior year .
Speaker #4: For the year 2025 , we now estimate our consolidated selling , general and administrative expenses to be approximately 52 million . Depreciation and full amortization expense in the third quarter of 2025 was 4.2 million , compared to 4.1 million in the year ago quarter .
Speaker #4: For the full year , we expect depreciation and amortization expense to be approximately 19 million . Interest expense decreased to 0.8 million from 1.5 million in the third quarter of 2020 .
Speaker #4: Four , due primarily to a decrease in average daily borrowings . For the full year 2025 , we expect interest expense of approximately 3 million .
Speaker #4: Our third quarter income tax expense was 4.7 million , resulting in an effective income tax rate of 26% . This compares to 3.7 million in the year ago quarter , or an effective income tax rate of 26.3% .
Speaker #4: Both quarters were primarily impacted by Nondeductible permanent differences . We continue to expect our tax rate for the full year 2025 within the range of 24 and 26% .
It was, it was really interesting because when, when we, when the numbers came out and it was actually over 100 million that first. Plus, you start to look at oh man, maybe it's, it's, it's getting caught up in in, uh, in current assets. But if you look at what's happened to our, our current assets, really, over the last, uh, since last year, at this time, uh, our, our, our was up like almost 20, 20 million dollars versus where it was in the second quarter and about 19 million dollars were were what from where it was in the third quarter of 24, which means stuff is being shipped and billed to the customer. And I think even more importantly, the contract assets, which is when we we produce and recognize revenue on something before, it's shipped those numbers versus the second quarter, we're down 6 million and versus the third quarter of 24. They were down 24 million. So, all that stuff moved in the right way.
Which shows production was good really the the shipments outpaced with the production level was in the quarter which was really a driver for it so it increased the revenue and increased Freight Revenue that we got. And the absorption numbers were were fantastic. So that's really the story of the quarter for water transmission.
Very helpful there. And and you know you mentioned you expect backlog levels will remain above 300 million through year end and, you know, that implies pretty significant order acceleration here in the fourth quarter. Um can you maybe talk about the drivers of that implied order acceleration and secondly what kind of margin profile is anticipated for those orders.
Yeah. So what I would tell you is, right now, looking at the bidding schedule, we have somewhere in the area of about $200 million worth of work bidding in the fourth quarter.
And just to give you a little bit of a perspective on that, we have, uh, in the schedule right now, uh, and this is on a tonnage p p p p p.
6,000 tons worth of projects that are scheduled to bid in the next 6 weeks.
So those are projects like Red River IPL. There's a reeler project in California. There's uh, uh, projects from Oklahoma City that are scheduled to bid in the next 6 weeks. So it's a, it's a very, very strong bidding quarter. And what you'll really see Julio is those those those bids in those jobs is those are 1 and put into the backlog, which will keep the backlog above 300, and, and likely improve it as we go through the quarter. Those those, those projects will be done in 2026. So really what it's doing is setting us up for a very strong entry into 20.
2026 with those things, bidding.
Yeah, that's fascinating. I mean, Red River is something you've talked about for a long time. Now for several years if I'm not if I'm not mistaken. Um, so to see that bidding in the fourth is that correct? Or
There's and and they're apparently, uh, and each 1 of the states is a little bit different, but there's some spending that has to happen. There are, there are actually 3 large segments of Red River bidding in, in that time frame in in the fourth in the fourth quarter. I don't know if they're all within that 6 week period but they're all bidding and scheduled to bid in the fourth quarter. There's also a segment of IPL that's scheduled to bid in the fourth quarter which you heard us talking about 10 years ago which is another extension of that program. So it uh the the fourth quarter is going to be a pretty interesting bidding quarter for us and and like we said in the script it should really work to enhance backlog as we travel through the quarter.
Very exciting. Um, I'll pass it on. Thanks very much.
Yes, no problem.
The next question comes from. Ted Jackson with Northland Securities. Please proceed.
All I can say is wow what an amazing quarter. So wow. Um
Uh, going back into, um, water transmission or spt, you know, I mean, um, you know, you've got kind of jump 14%. I mean, you just try to blow out quarter with it. Can you just talk a bit about, you know, kind of the utilization rates that you had across your
Yeah. You know your facilities and kind of like what you know where are you with that? And you know is there I mean the fact that you could do something like this and the right environment, I mean, you could repeat this, you feel, you know, just kind of curious. Like you know, what are some of the benefits you had and, you know, yeah for I think it's
We're getting to but I think that when you look at a good water transmission quarterly Revenue rate you're looking at something that's between 80 and 90 million. That's a good quarterly rate. Probably more like 82 to 85 but these kind of things can happen. When you look at the utilization that we ran across our facilities in in the third quarter, I would call it somewhere in the high 60s to about 70% utilization because we did have, uh, a couple cases in the quarter where there were was enough shipment requirement demands from our customers that we actually had to do a little bit of second shift work because normally our water transmission systems plants are are really run on 1, shifting.
And more, uh, because you we're really doing this on 1 shift at each 1 of the plants.
Um, you know, with the 14% rise in tonnage, I mean, and clearly, you know, very robust bookings worldwide.
the the business is out there, the competitors that you have, you're not
You know, you don't have to to fight on price for volumes how much of that you know you know like is there an opportunity for you to see better than maybe? Let's take this quarter out but better than historic margins given Canada environment. You are you're in right now or I mean how's the how's the competition for
You know, the use of your facilities these days, you know, I mean yeah you know.
I think it's, I think,
It's pretty stable, uh, with with the competitive landscape. I, I think, uh, when you look at backlogs across the industry, it appears that every everybody's backlog is up a bit and that's always a recipe for for better margins As you move forward. So, you know, when you start looking at better than historical margins, I think we we have a market right now. That's a, that's a good market, right? And and, and I don't want to get too much into the ija stuff in front of this, but, but we have a good market rate now and it's it's not a blowout Market, but it's a good market. And right now, the competitive landscape fits the size of the market very well. Uh, you know, bids are competitive. Uh, you've got to continue to work on cost to drive your cost down in the plants and we do that with lean manufacturing programs and things of that nature and setting metrics in each 1 of the plants, but I think the landscape is good.
But it's still very competitive on some bids. Uh, we have some bids in the fourth quarter that we expect to be very competitive bids when you start getting up over and we're right now, still Ted in the demand level, that's probably about 140 to 145,000 tons, it might inch up a little bit above that with what's going on in the fourth quarter and that's just a pretty good quarter. If you get a quarter that is or excuse me demand, that's for a year. If you get a year that's over, 200,000 tons.
I do think that's the point where you can start seeing those margins that are that are larger than what we've seen historically. Now, uh, in in in I started, I started talking about the iija a little bit before that and you probably have other questions on that. But, you know, the, the, the thought of the ija is originally been. Hey this is going to cause a substantial spike in the in the the markets for the water transmission systems business as as we move forward during some period but I think that the the uh the funding is trickling out relatively slow and of the 50 billion dollars. You know, EPA has about 43 or 44, the Bureau of wreck has probably about 8 million. Only about 20 million of it or or has been obligated by the EPA and the Bureau of wreck has about 5 million 6 million. So only about half of the funds have been obligated at this point. The
Level Marketplace is where we look at to 26. 2728 is a better scenario for the water transmission business over that period of time. I think it will allow for stable business, higher stabilized margins, and improved performance as we go forward, related to the cost reductions that we're implementing in the plants.
Okay. Um I got 2 more topics and I'll get out of line too. Um, just quickly over on to the, to the pre-cast, side of the house. I mean, you know, a nice Revenue number. I was a little surprised on the margin given that, you know, my understanding is been that if the park business is turning around that, that's typically been a better margin
um,
You know, uh, set of products for you all. I mean, so maybe you could just unpack that a little bit for me is that just because you know, you you know, you had some underutilization that Geneva or is my memory on that incorrect, just kind of curious just to, you know, on the market side for that.
Want that will be adding a second shift to that that we're working on, which will further enhance the market or the margins and the old uh, transmatic that we have at Geneva will be able to shut that down and not have to be running that. So that'll reduce cost and enhance the margins. So we expect that Geneva margins to start coming back up in the fourth quarter, uh, to a more normalized rate on the park side. What I would tell you is the park margins now are up, probably a few hundred basis points from where they were from the beginning of the year, so that is definitely traveling in the right direction and really being driven by. I think owners and developers are
Taking into account that the interest rates going to fall over a period of time. So they're pushing projects into to planning in design right now, which is going to continue to build that business over the next 12 months to 18 months. So we think we'll start to see the park margins. Probably start to normalize in the next couple quarters, but the park margins is, have really come up by about 300, or maybe even a little bit more than 300 basis points. Since the beginning of the year, it's really the Geneva fall off with the increase depreciation, the double running of the equipment in the quarter, until we get it, shut down, and then getting the exact 2500 up and getting it onto a second shift that impacted the, the, the third quarter for Geneva. And we we see that coming back in the fourth quarter and the margins starting to return to normal. So it's just a timing.
Think Ted.
Okay. And then my last 1 is um implicit in the guides that are and put forth. Is that, that means that fourth quarter.
Uh, sgna would be about 13 million dollars. And, you know, if you're going to hit your, would you say 52 for the year? How would we think about your, um, that that expense? I mean, I know you're not talking 26, but you know, we expect a similar, you know, run rate for 2652 53 million bucks. I mean, just giving kind of how that those expenses expenses have, kind of scaled up during the last, you know, fiscal year.
Yeah, I would tell you that, we always think about it first maybe uh, as, as kind of a, a normal sort of inflationary adjustment, when we start to model our sgna for our budgeting process. But the other thing I would tell you is that
We internally are pretty devoted to, to looking at, uh, our costs, especially at some of the support centers, uh, and the sales, uh, cost centers to, to really try to drive in on, on the value creation. That's that, that they're supporting, right? So we're we're looking at, uh, you know, places where potentially some zero bait, zero bases, budgeting where we can potentially look at things that, uh, we can scale away. Um, so I think we're going to be having some opportunities to kind of maybe, maybe cut modestly uh you know, kind of from that from that level up, you know for inflation. Uh
So you have to set a bad. That's not a bad expense.
And that's what does have us elevated. Uh, you know, this quarter, particularly in what I expect to be, uh, something that that elevates Us in the fourth quarter as well.
See Ted just a little bit of a add-on to that when you think about sgna expense, you know, my view when when we look at that is that our operating margin should be 10% or above. And we're not quite there yet. So we've got some pretty hard looks going like Aaron said on on sgna, we've implemented some zero-based budgeting this year to really kind of hone in on that because the idea is to get those operating margins above, 10% on an annual basis, not just for a quarterly basis, but to to have that sustained, 10% or better for the year.
Okay.
All right, um, I took too much of the time on the call but um, again the port of fabulous quarter, congratulations.
Good for you.
The next question comes from John Vise with da Davidson please proceed.
Hi, good morning. Congrats on the order.
Good morning. Good morning, John
Just looking at pre-cast, can you talk about your ability to push pricing right now as some of the uh cost inputs begin to ease?
And because I can start the question. Oh, go ahead.
No, let me answer the first one because I, John, I won't remember the second part. By the time I get to the end of the first. Yeah, we've been successful.
in pushing, uh,
reaching increases at both sides of the pre-cast business recently at the park side and that really driven by by I think the Improvement that we're seeing in the non-residential side of the business. We're seeing that in our Revenue at Park. We're also seeing it in the, in the, in the volumes that we're getting, and it's really supported by what we're seeing in the G in the Dodge momentum index. So, that's, that's moving in the right direction. And on the Geneva side, you know, for that business, still is standing strong, it had a record year last year, it's very likely heading toward another record year. This year in price increases are being pushed forward in that. So so we are, we are successfully pushing them forward. And we, as you mentioned, we are seeing the, the raw material costs, the cement. The, the the, the, the the the small rock the large Rock, the aggregate piece, all those the sand, all those kind of flattening.
Out. And stabilizing a little bit versus what we've seen over the last couple of years. So what was the second part? Sorry, I interrupted you during the first part.
No, no problem. Thanks for giving us that caller. Um yeah so just giving what you said, um,
I was wondering what the, what volume, uh, how how does volume pulls in your expectations, um, versus pricing?
See say that 1 more time. You cut out for a second. Yeah.
Oh yeah, no problem. Um,
How this is wondering about how does the volume play into the growth of both these businesses over the next 12 months. Is, it makes sense.
Yeah, I think you'll you'll see a growing volume in uh, in the park side of the business.
And and that's simply the that simply is related to the non-residential piece. I also, I also think you'll see a volume in the Geneva business that is is continuing to inch its way up. And we're starting to do a little bit more non-residential work at the Geneva plant site. So that'll improve the volume over the next uh few quarters. And really, you know I think that by the time we we start getting into into mid next year beyond that the the Geneva facilities is going to be on close to a hundred million dollar annualized rate, and park will be a little bit behind that but uh, running towards
That probably, maybe maybe more toward the the first quarter of 2027, but the both of those businesses are expected to improve throughout 26, based on the numbers that we're looking at preliminarily in the pan plan.
Between volume and pricing. Um, what has a better driver of the next 12 months?
Uh, I think uh, probably the volume and the absorption, the higher levels will absorption and the volume will be uh a little bit more of an impact in what the pricing is.
And just 1 last 1 for me uh in the water transmission. Um, can you just talk about a little bit of
Next year about your backlog. Um, specifically just trying to understand more about the sustainability or or
How should we think about what the high watermark?
Is, um, starting in q1 and into the next year.
For for backlog, specifically.
Yeah, and then just probably add a little bit about the revenue Cadence, as well.
Yeah, and I think the the backlog is based on the amount of bidding that we have going on in in the fourth quarter, we have the expectations that, you know, there'll be some wins in that bidding for us and that our backlog is is going to continue to inch up through year end. Uh, that's what we anticipate at this point. So we're going to end up uh, pretty strong with backlog, going into the first quarter of 2026 uh, as far as as far as revenue for the the uh water transmission systems business. You, when you look at Revenue numbers for that business, good Revenue numbers are somewhere between 80 and 90 million at the beginning of the year. Generally you're ending up with with Revenue numbers because you're coming through some quarters in. The first first quarter that's also affected by whether you're probably something closer to in the low 80s in the first quarter. As you climb up to the second and third quarters.
Like we've seen over the last couple of years. You end up something within that's more like 85 up to close to 90. And and then in the fourth quarter, you're getting down to something that's probably more like mid 80s to low 80s. That's how you can think about the the revenue on a normalized basis with what a transmission business business, as it sits right now. But I will say, I think that there's
Potential now and again to get a quarter. And when you look at the quarters, oh over the last couple years last third quarter, I believe was, what the record was the record at that point. Uh, before the second quarter of this year, which is what I think became the, the record quarter for us. In obviously, driven by both water transmission and and and and pre-cast until the first quarter of this or the third quarter of this year, which became the record. So, the second and the third quarters are generally the big ones for both sides of the business John
All right, I appreciate it. Thank you so much again. Thank you.
Thanks we have a follow-up from Julio. Romero with ceddo. Please proceed.
Thanks. Hey guys. Uh, thanks for taking a couple of follow-ups here. Um, my first 1 is just on um, you know, the state of Texas has proposition 4 on the ballot next week. And that dedicates, I think 20 billion dollars towards water infrastructure, over the next 20 years with, um, dedicated state taxes, would would your company would npx benefit from that and and if so um which which parts of the portfolio would benefit?
It's definitely uh on you know for for for water infrastructure to water, transmission systems site, right? The state of Texas. What I would say about the state of Texas is they're not waiting on iija funding. Okay. They create their own funding. They had the Texas Swift program going 10 or 12 years was years ago, which is the state water implementation fund for Texas. And now they're they're driving this proposition 4 Forward so that will certainly have some funding for projects that are water Transmissions systems projects going forward. In fact I think the, you know, the legislation in Texas even before the vote on this, because this has to be voted on here in in November by the uh by the citizens. I think the the the legislation has about 2.5 billion already teed up to go into the Texas water development uh funding to start funding some of these projects. So we will definitely benefit on the water transmission side uh, for from
From these funding mechanisms in Texas, just like we have over the last probably 15 or 20 years from the Swift program. For uh you have late Texoma, you had IPL and all these different projects and quite frankly which is why this the state of Texas is always 1 of the biggest uh 1 of the biggest markets for water transmission systems so it's going to be a good thing.
Very helpful there and then um earlier you touched on the cash flow benefit uh, from water transmissions in the quarter. Um, can you maybe just talk about the sustainability of the of those cash flow Dynamics going into 26 and Beyond?
Has done a great job at, uh, getting cash in. And, you know, obviously the water transmission systems business, you know, years ago, tied up a lot of cash and current assets, right? Well, what we've done is we put a focus by putting putting part of the, the the senior level variable compensation based on cash flow. There's a big focus on that and getting progress payments for, for projects that we're doing, getting paid for steel up front and things of of that nature. So we think that this, the sustainability of that is great as we go forward in the future, we we would like to have a Target, always that our cash flow is is is similar to what our EPS is, which I think is a is a, a good, uh a a good level to have that at. And we're always going to be doing that because really the the water transmission systems business is kind of turned into a cash flow machine at this point and
it's really helping Drive the growth platform for the company.
So uh, that's what's doing it.
Material on hand or material uh material on hand payments. Prepayments progress payments, all those things are now, now happening on the water transmission systems business. Something that didn't happen 5 years ago.
Truly I would uh I would say that for your benefit the the water transmission site cache cycle was something that we had seen uh kind of usually getting pretty elevated during our busy.
Orders. See something like Q2 Q3 those quarters, we'd see a spike because we were basically working the the the jobs as opposed to thinking uh and being being very thoughtful of the the the related uh working Capital Management.
I would say over the last 4 quarters we've been we've been excellent. Now we have not seen a spike at all. In fact, our our we've seen exactly the opposite. We started uh, you know, basically in the middle of last year and what we thought was a very good level of of working capital days for the WTS segment, you know, just below 190 and since then, we've seen it decrease down to about 165 days.
So, I did on your sustainability part. I mean, I think it's something that is a mindset that Scott was mentioning earlier that has really changed, something that he's really pushed through the business and something we talked about,
So I think I think it's very sustainable and and actually excited to to say that because if you ask me too with 2 or 3 years ago, I was it was probably 1 of the probably the Bain of my existence to be honest with you.
Uh, very exciting. Well, nice job again, guys. Thanks
hey Julio.
Thank you at this time. I would like to turn the call back over to Mr. Scott. Montrose for closing comments.
Yes. Again, I'd like to thank everybody for joining us today. And we're, we're, we're pretty pleased with the operational, uh, execution that we've had and what we consider to be a fairly Dynamic environment in 2025, I think it really affirms the Strategic choices we've made over the last several years. And, and, and starts to highlight the strengths and the the resilience of our evolving business model. And I think is, you know, we just talked about a little bit with, with Julio, the execution continues to drive growth in free, cash flow flow, particularly in the water transmission systems business, which which for many years, tied up a bunch of cash. And like, I just said, it's the, the water transmission systems business is really become a cash flow generating machine. As we look ahead, as we talked about the bidding activity for water, transmission is really strong for the rest of 2026. We think we're going to have very strong backlog, momentum building and positioning for for
Positioning to us to go into 2026, very strong and the pre-cast business uh non-residential site is continuing to gain Traction in the Geneva. On the residential side, remains strong in closing. You know, we we're still committed to number 1, Workforce safety. That's the number 1 thing that we do margin expansion and executing our strategic growth initiatives to create long-term value for our shareholders. I just like to thank everybody again for your time and continued support. And we look forward to speaking with you again on the fourth quarter, call in the February time frame. So thank you.
This concludes today's teleconference. You may disconnect your line at this time. Thank you for your participation and have a great day.