NWPX Infrastructure NASDAQ: NWPX reported record third-quarter results as strength in its Water Transmission Systems business lifted sales, profit and cash generation, while its Precast segment expanded margins despite softer conditions in residential construction.
Net sales rose 18.7% year over year to a record $179.4 million in the third quarter of 2026. Net income increased 35% to $18.2 million, or $1.86 per diluted share, compared with $13.5 million, or $1.38 per diluted share, a year earlier. Chief Financial Officer Aaron Wilkins said the result was the company’s highest quarterly earnings per share excluding the third quarter of 2018, when results included a one-time bargain purchase gain tied to an acquisition.
Consolidated gross profit increased 18.8% to a record $38.2 million, while gross margin held steady at 21.3%. Operating income rose 27.7%, according to Wilkins. The company also generated $27.4 million in operating cash flow and $20.4 million in free cash flow during the quarter.
Water Transmission Systems Drives Growth
Water Transmission Systems, or WTS, reported record revenue of $131.9 million, up 27% from $103.9 million a year earlier. The increase reflected a 7% rise in tons produced and a 19% increase in selling price per ton, driven by product mix.
President and CEO Scott Montross said a previously discussed NDA project contributed approximately $31 million of third-quarter revenue. The project had a total value of about $56 million, with roughly $40 million recognized through the second and third quarters. Montross said the company expects further contribution in the fourth quarter, though some of the remaining work could extend into early 2027 depending on the contractor’s timing.
WTS gross profit rose 23.4% to $27.3 million. Segment gross margin declined 60 basis points to 20.7%, primarily because of production mix, though Montross said year-to-date WTS margin remained about 180 basis points above the prior-year period.
The segment ended the quarter with a record backlog, including confirmed orders, of $435 million, compared with $423 million at June 30 and $301 million a year earlier. Montross said backlog continued to grow even as the company worked through a meaningful portion of the NDA project, reflecting broader demand for water infrastructure.
Management said bidding activity was particularly strong during the third quarter and remained elevated into October. Montross said full-year base bidding levels, excluding the NDA project, are expected to exceed 2025 levels. Without the NDA project, WTS revenue through the first nine months of 2026 would have been approximately 10% higher than in the comparable period of 2025.
Steel lead times remained extended but began to moderate during the quarter. Montross said the company’s relationships with domestic mills have supported reliable access to steel. During the question-and-answer session, Wilkins said steel represented approximately 28% of cost of goods sold in the quarter.
Precast Margins Improve as Data Center Work Expands
Precast sales increased 0.6% to $47.5 million. Selling prices rose 3% because of product mix, partly offsetting a 4% decline in shipment volumes. The segment received approximately $1 million of revenue from Serpentix, which was acquired in September and contributed for only part of the quarter.
Precast gross profit rose 8.6% to $10.9 million, and gross margin improved 160 basis points to 22.9%. Wilkins attributed the improvement primarily to stronger margins in the non-residential portion of the business.
Montross said residential construction remained muted and some commercial markets showed softness, but the company has shifted production toward non-residential, institutional and data center-related work. He said the Geneva facilities, historically about 85% residential, were about 40% residential during the current year, with the balance supported by non-residential and data center orders.
Through the third quarter, NWPX quoted $33.5 million of data center projects and booked more than $11 million of related orders. Montross said about $7 million of those bookings had shipped during the year. He added that data center projects generally carry higher margins than typical Precast orders because of the speed at which customers require projects to be completed.
The Precast order book totaled $67 million at quarter-end, including $10 million related to Serpentix. The legacy Precast order book was $57 million, down from $61 million at the end of the second quarter but above $55 million a year earlier. Management said customer shipment delays, rather than cancellations, weighed on quarterly revenue amid uncertainty involving interest rates, fuel costs and the broader economy.
Serpentix Acquisition and Financial Position
The company completed its acquisition of Serpentix Conveyor during the quarter for $49.7 million. Serpentix makes engineered conveyor systems used primarily in municipal wastewater treatment plants and industrial manufacturing facilities.
Montross said Serpentix complements NWPX’s Park Process business, which provides dewatering, separation and mixing capabilities for wastewater applications. He said the acquired business has a margin profile “significantly greater” than the company’s traditional Precast operations and could serve as a platform for growth in wastewater conveyance, sludge and biosolids applications.
At Sept. 30, cash and cash equivalents totaled $6.1 million, while total debt was $27.7 million, including $18.5 million under the revolving credit facility. The company had about $105 million of additional borrowing capacity.
Wilkins said the company expects full-year 2026 SG&A expense of $55 million to $56 million, depreciation and amortization expense of $22 million to $23 million, capital expenditures of $21 million to $23 million, and free cash flow of $62 million to $72 million. Management expects the effective tax rate for the full year to be approximately 23% to 24%.
Fourth-Quarter Outlook
NWPX expects consolidated fourth-quarter performance to exceed both the fourth quarter of 2025 and the first quarter of 2026, despite seasonally fewer shipping days, holiday shutdowns and potential weather disruptions.
Management expects WTS backlog to remain elevated through year-end and said the company has substantial production already in backlog for 2027. Precast is expected to remain steady sequentially in the fourth quarter, and the company continues to expect 2026 to be a record year for Precast revenue.
Montross said the company’s priorities include maintaining safety, emphasizing margin over volume, pursuing strategic acquisitions, implementing cost efficiencies and returning capital to shareholders when merger-and-acquisition opportunities are limited.
About NWPX Infrastructure (NASDAQ:NWPX)
NWPX Infrastructure NASDAQ: NWPX, formerly known as Northwest Pipe Company, is an infrastructure manufacturer focused on products used to transport, store and manage water. The company supplies engineered steel pressure pipe and related systems for municipal water transmission, water treatment, wastewater and other utility applications.
Its product offerings also include precast concrete structures and components used in stormwater management, sanitary sewer systems and other civil infrastructure projects.
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