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    NWPX
    Earnings call· Jun 2026(Q2 FY26)

    NWPX Infrastructure Q2 FY26 earnings call NWPX

    Jul 30, 2026 Source

    Executive summary

    NWPX Q2 FY26 — Record Revenue, Gross Profit, and EPS Driven by Strong WTS Performance

    NWPX Infrastructure delivered a historic second quarter, achieving record financial results across key metrics, primarily fueled by exceptional performance in its Water Transmission Systems segment. Despite weather-related headwinds impacting Precast sales early in the quarter, the company saw strong recovery and positive momentum heading into the second half of the year, reinforcing confidence in a record FY26. Management continues to prioritize strategic acquisitions and capital returns while navigating a strong demand environment.

    Highlights

    5

    • Consolidated net sales up 19.7% year-over-year to $159.5 million.

    • Consolidated gross profit increased 35.5% to $34.4 million, with gross margin expanding 250 basis points to 21.5%.

    • Record diluted EPS of $1.62, up from $0.91 last year, marking the highest in company history (excluding a one-time gain).

    • Water Transmission Systems (WTS) revenue reached a record $113.2 million, up 33.8% year-over-year, with gross margin expanding 360 basis points to 21.4%.

    • Strong free cash flow of $9.9 million, up from $1.9 million last year, leading to a raised full-year FCF outlook of $50 million to $65 million.

    Concerns

    3

    • Precast revenue decreased 4.8% year-over-year to $46.3 million due to an 11% decrease in volume shipped, impacted by unusually heavy rainfall in Texas and customer delays in Utah during April and May.

    • Precast gross profit was down 1.7% to $10.1 million, primarily impacted by lower shipment volumes in April and May.

    • Elevated steel prices, with published prices over $1,200 a ton and expected to inch up further, posing a cost pressure despite pass-through mechanisms.

    Guidance & targets

    11
    CategoryTargetConfidence
    Full-year 2026 Consolidated SG&A
    $54 million to $56 million
    medium materiality
    High
    Full-year 2026 Depreciation and Amortization
    $21 million to $23 million
    medium materiality
    High
    Full-year 2026 Effective Income Tax Rate
    approximately 24% to 26%
    medium materiality
    High
    Full-year 2026 Capital Expenditures
    $20 million to $24 million
    medium materiality
    High
    Full-year 2026 Free Cash Flow
    $50 million to $65 million
    high materiality
    High
    Q3 2026 Consolidated Performance
    comparable to or stronger than the second quarter of 2026
    high materiality
    Medium
    Q3 2026 Water Transmission Systems Revenue and Margins
    similar to the prior quarter
    medium materiality
    Medium
    Full-year 2026 WTS Bidding Levels
    stronger than what we saw in 2025
    high materiality
    High
    Q3 2026 Precast Revenue
    higher than both the third quarter of last year and the prior quarter
    medium materiality
    High
    Q3 2026 Precast Margins
    stable
    medium materiality
    High
    Full-year 2026 Precast Revenue
    another record revenue year
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Water Transmission Systems
    Record revenue and gross profit, up from $84.6 million last year. Growth driven by higher production volume, strong project execution, favorable project timing, and improved selling prices. Gross margin improved 360 basis points from 17.8% last year, with gross profit up 60.9% from $15.1 million.
    Tons produced: up 26% YoYSelling prices per ton: up 6% YoY
    		$113.2 million33.8%—$24.2 million gross profit, 21.4% gross margin
    Precast
    Revenue decreased from $48.6 million last year due to adverse weather in Texas and customer delays in Utah in April and May, impacting volume. Partially offset by higher selling prices due to product mix. Gross margin improved 70 basis points from 21.2% last year despite lower volumes, due to stronger pricing and better cost absorption. Gross profit was down 1.7% from $10.3 million. Conditions improved significantly in June.
    Volume shipped: down 11% YoYSelling prices: up 7% YoYPark production: up 24% YoYGeneva production: down 5% YoY
    		$46.3 million-4.8%—$10.1 million gross profit, 21.9% gross margin

    Operational metrics

    20
    Consolidated Net Sales
    $159.5 millionup 19.7% YoY from $133.2 million
    Q2 FY26

    Record consolidated net sales.

    Consolidated Gross Profit
    $34.4 millionup 35.5% YoY from $25.4 million
    Q2 FY26

    Record consolidated gross profit.

    Consolidated Gross Margin
    21.5%up 250 bps YoY from 19%
    Q2 FY26

    Gross margin expansion underscores operating leverage.

    Diluted EPS
    $1.62up from $0.91 YoY
    Q2 FY26

    Highest EPS posted in company's history, excluding a one-time gain in Q3 2018.

    Net Cash Provided by Operating Activities
    $14.1 millionup 159% YoY from $5.4 million
    Q2 FY26

    Improved profitability coupled with favorable changes in working capital.

    Capital Expenditures
    $4.2 millionup from $3.5 million YoY
    Q2 FY26

    Capital expenditures for the quarter.

    SG&A Expenses
    $13.2 millionup 5% YoY
    Q2 FY26

    Modest increases in incentive compensation expense and professional fees.

    Depreciation and Amortization Expense
    $5.3 millionup from $4.9 million YoY
    Q2 FY26

    Depreciation and amortization expense for the quarter.

    Interest Expense
    $0.3 milliondown from $0.8 million YoY
    Q2 FY26

    Reflecting lower average daily borrowings.

    Income Tax Expense
    $5.6 millionup from $3.4 million YoY
    Q2 FY26

    Income tax expense for the quarter.

    Effective Income Tax Rate
    26.3%down from 27.5% YoY
    Q2 FY26

    Primarily impacted by non-deductible permanent differences.

    Consolidated Net Income
    $15.8 millionup from $9.1 million YoY
    Q2 FY26

    Record consolidated net income.

    Net Cash Position
    $9.3 millionnot stated
    June 30, 2026

    Resulting from cash and cash equivalents of $19.3 million and debt of $10 million.

    Available Borrowing Capacity
    $124 millionnot stated
    June 30, 2026

    Under the existing credit agreement, with no outstanding borrowings.

    Steel as % of Cost of Sales
    34-35%not stated
    Q2 FY26

    Steel is a significant pass-through cost for the company.

    Steel Cost Increase
    24%YoY
    Q2 FY26

    Increase in the cost of steel consumed during the quarter.

    WTS Plant Utilization Rate
    65%not stated
    Q2 FY26

    Indicates capacity available for increased production.

    Revenue per Yard Shipped Growth
    29%YoY
    Q2 FY26

    Supported strong performance at Park despite elevated interest rates.

    Dodge Momentum Index (Commercial)
    22%up YoY vs June 2025
    June 2026

    Indicating broad-based strength for non-residential construction activity.

    Dodge Momentum Index (Institutional)
    22%up YoY vs June 2025
    June 2026

    Indicating broad-based strength for non-residential construction activity.

    Industry KPIs

    2
    MetricValueDetails
    Total backlog$423 millionUSD
    End market pipelinemore than $125 millionUSD

    Orderbook & backlog

    3
    Total WTS Backlog (including confirmed orders)$423 millionJune 30, 2026

    down slightly from $430 million at March 31st; up from $348 million last year

    Includes large unplanned NDA project; expected to normalize to $300M-$350M range as NDA project winds down through Q3 and early Q4.

    Precast Order Book$61 millionJune 30, 2026

    up from $55 million at March 31st; up from $56 million at June 30th last year

    Positioning the business well for the remainder of the year.

    WTS Project Pipeline (bid on, awards pending)more than $125 millionJune 30, 2026

    Expect to secure a meaningful portion of these opportunities.

    Capital programs

    1
    Precast Product Spread Strategy & Growth Initiativesunderway
    Period spend: $6 million

    Benefit: Investment projects to support precast growth and capacity utilization

    Part of the full-year 2026 CapEx guidance of $20 million to $24 million.

    Risks & headwinds

    5
    Unusually heavy rainfall and customer-driven delaysApril and May (Q2 FY26)

    11% decrease in volume shipped for Precast, 4.8% year over year decrease in Precast revenue

    Mitigation: Conditions improved significantly in June; company 'gotten our way through pretty well without having a problem'.

    Ongoing softness in the residential construction marketQ2 FY26, ongoing

    Geneva production was down 5% year over year

    Mitigation: Offset by growth in the non-residential business; Precast business shifting more towards non-residential.

    Elevated interest ratesOngoing

    not stated

    Mitigation: Non-residential demand trajectory continues to improve, offsetting residential impact.

    Steel price increasesQ2 FY26, expected to continue

    Steel cost was up about 24% (consumed steel, Q2 YoY); published prices over $1,200 a ton, potentially $1,400 a ton or more.

    Mitigation: Pass-through mechanism for costs, leading to higher project pricing and gross profit dollars; company 'not afraid of higher steel prices as long as we can get steel'.

    Tariff situation on foreign steel and mill outagesOngoing, moving into Q3/Q4 for mill outages

    Limited supply into the United States; further restriction on supply in the marketplace due to mill outages.

    Mitigation: Drives up domestic steel prices, which NWPX can pass through, leading to higher project pricing and gross profit dollars.

    What to watch in Q3 FY26

    5

    WTS Core Business Revenue Growth

    Q3 FY26
    CurrentImplied ~25% YoY in Q2 (before NDA project)
    TargetStronger than Q2 core business

    Why it matters

    Verifies continued strength in the base WTS business beyond the one-time📎 project.

    No, I don't think that's it at all. ... we expect the third quarter to be larger on water transmission, on precast, and with better profitability than we saw in the second quarter. And I think what you'll see as far as the base business, Julio, that the base business will be a little bit stronger than what we saw in the first quarter.

    Q&A highlights

    9

    Julio asked if the Q3 outlook for 'similar revenue' implied a sequential step-down in core WTS sales, given the strong Q2 performance and the unplanned NDA project.

    Scott clarified that the Q3 outlook is cautious due to weather but expects Q3 to be larger than Q2 for WTS, Precast, and overall profitability. He stated the core WTS business would be stronger than Q2 before the NDA project.

    “No, I don't think that's it at all. ... we expect the third quarter to be larger on water transmission, on precast, and with better profitability than we saw in the second quarter. And I think what you'll see as far as the base business, Julio, that the base business will be a little bit stronger than what we saw in the first quarter.”

    asked by Julio Romero · answered by Scott Montross

    2 min read6 chapters

    Detailed Narrative

    01

    Water Transmission Systems (WTS) Performance Drivers

    The WTS segment's record revenue and margin expansion were primarily driven by a 26% increase in tons produced and a 6% improvement in selling prices per ton. This was supported by strong project execution, favorable project timing, and a beneficial product mix. Higher production volumes led to improved overhead absorption, significantly contributing to the 360 basis point gross margin expansion. Management expects these positive trends to continue through the remainder of the year, with demand remaining stable to upward trending.

    02

    Precast Segment Recovery and Outlook

    The Precast segment experienced a 4.8% revenue decrease due to an 11% volume decline in April and May, attributed to unusually heavy rainfall in Texas and customer delays in Utah. However, conditions improved significantly in June, with the segment closing the quarter with strong momentum and an order book of $61 million. Management expects a stronger second half for Precast, with higher revenue and stable margins, driven by solid demand in non-residential markets, and anticipates another record revenue year for Precast in 2026.

    03

    Non-Residential Construction Strength

    Leading indicators for non-residential construction remain solid, with the Dodge Momentum Index up 22% year-over-year in June for both commercial and institutional sectors. This broad-based strength is expected to continue through the end of 2026 and into 2027, particularly bolstered by data center projects, which are a key demand driver for the Precast business. This strong non-residential demand is helping to offset ongoing softness in the residential construction market.

    04

    Strategic Priorities and Capital Allocation

    NWPX is focused on five key priorities: maintaining a safe workplace, prioritizing margin over volume, intensifying strategic acquisitions, implementing cost efficiencies, and returning value to shareholders when M&A opportunities are limited. The company is building cash on its balance sheet to support growth and shareholder returns. Management is actively evaluating M&A opportunities in precast and adjacent infrastructure businesses, considering greenfield sites and ancillary businesses if M&A activity remains slow in the precast sector.

    05

    Steel Price Dynamics and Impact

    Steel costs represent a significant portion (34-35%) of WTS cost of sales. While steel costs increased approximately 24% year-over-year in Q2, NWPX has successfully passed these costs through, resulting in higher project pricing and increased gross profit dollars. Management noted published steel prices are over $1,200 a ton and expects them to continue inching up, potentially reaching $1,400 a ton or more, driven by tariff-induced supply limitations and upcoming mill outages. The company remains comfortable with higher steel prices as long as supply is available.

    06

    WTS Backlog Normalization

    The WTS backlog, including confirmed orders, stood at $423 million at quarter-end, slightly down from $430 million at March 31st but significantly up from $348 million last year. This figure includes a large, unplanned NDA project. As this project winds down through Q3 and early Q4, the WTS backlog is expected to normalize📎 to historical ranges of $300 million to $350 million, reflecting the one-time📎 nature of the large project and the underlying strength of the core business.

    AI-generated summary of the company’s earnings call. Not investment advice.