NWPX - NASDAQ

Greetings, and welcome to the NWPX Infrastructure Fourth Quarter 2025 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mr. Scott Montross, Chief Executive Officer. Thank you, sir. You may begin.

Good morning, and welcome to NWPX's Fourth Quarter and Full Year 2025 Earnings Conference Call. My name is Scott Montross, and I am President and CEO of the company. 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, February 25, 2026, at approximately 4:00 p.m. 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. Please refer to our most recent Form 10-K for the year-ended December 31, 2024, and in our other SEC filings for a discussion of such risk factors that could cause actual results to differ materially from our expectations. 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 2025 performance and our outlook for the first quarter of 2026. Aaron will then walk you through our financials in greater detail. 2025 was another outstanding year for NWPX, marked by record financial performance, disciplined execution, operational improvements across our facilities and sustained demand across our end markets. First and foremost, we achieved record safety performance in 2025 with a 1.06 recordable incident rate, reflecting our culture and our belief that operational excellence begins with protecting the well-being of our employees. Our annual net sales reached $526 million, up 6.8% from 2024 and the highest in our company's history. This performance was supported by continued strength in the WTS bidding environment with the fourth quarter marking our strongest bidding quarter of the year, signaling solid momentum ahead. We also benefited from a better-than-normal fourth quarter. In Precast, our revenue was strong and margins continue to improve. WTS posted solid revenue and a robust margin as well. Our strategy drove record consolidated gross profit dollars of $103.6 million, up 8.6% year-over-year, resulting in a gross margin of 19.7% compared to 19.4% in 2024. This translated into record profitability with earnings of $3.56 per share and free cash flow of $47.1 million or $4.74 per share, demonstrating the strength, consistency and quality of our earnings and the durability of our cash generation. Revenue from our WTS segment totaled a record $350.9 million in 2025, up 3.8% year-over-year with increased margins. Our performance reflected higher selling prices per ton, up 14% year-over-year, driven by an improved product mix and a broader market dynamic in addition to favorable project timing across several large Water Transmission jobs and another very strong year of bookings associated with good project bidding volume. These gains were partially offset by a 9% decline in the production volume associated with the content of various projects produced throughout the year as well as shifts in project timing. The fourth quarter was exceptionally strong with a 26% improvement in selling price per ton, a consistently healthy bidding environment and a strong project execution, all reinforcing the momentum we are carrying into 2026. WTS gross profit reached a record $67.1 million, up 7.2% from 2024, resulting in a gross margin of 19.1%, up from 18.5% in 2024. This improvement was driven by higher selling prices and a more favorable product mix and supported by continued strong customer demand and solid operational execution. Our WTS team continued to execute at a high level on both bids and project management throughout the year. Robust fourth quarter bidding activity increased our WTS backlog, including confirmed orders, to $346 million at year-end, up from $301 million at September 30 and well above the $310 million level at year-end 2024. We expect the 2026 bidding environment to be relatively consistent with 2025. Precast revenue increased 13.3% year-over-year to a new annual record of $175.1 million. Our performance was driven by an 8% improvement in sales volume, reflecting continued growth in the non-residential portion of our park business with shipments and production increasing double digits year-over-year. Despite only modest rate declines in 2025 that continue to limit commercial construction activity, this improvement reflects signs of stabilization and an improving trajectory heading into 2026. We also benefited from sustained growth in the residential portion of our business at Geneva in 2025. Leading indicators strengthened as we've moved through the year with the Dodge Momentum Index up 50% in December of 2025 versus December of 2024. The commercial sector was up 45% and the institutional was up 60%, indicating positive signals for 2026 and into 2027 for non-residential construction activity. On pricing, we benefited from a 4% year-over-year increase in realized selling prices driven by price increase implementations and changes in product mix. Stronger volumes and pricing contributed to an 11.3% year-over-year increase in Precast gross profit to $36.5 million, resulting in a gross margin of 20.8%, down modestly from 21.2% in 2024, primarily due to lower Park production volumes early in 2025 and product mix. Most important is that the Precast margins improved each sequential quarter in 2025, specifically the non-residential business at Park. These results demonstrate that the absorption rates are beginning to improve with higher volume. We expect margins to continue recovering as non-residential demand builds. Our Precast order book ended the year at $57 million, up slightly from $55 million at September 30, reflecting solid momentum heading into 2026 and modestly below the $61 million level at year-end 2024. As we continue to execute our long-term strategy, we are making targeted organic investments across our footprint to expand capacity, enhance efficiency and support the growth of our platform. These efforts are taking shape across several areas of the business. First, by expanding Precast capabilities across our network and evaluating opportunities to introduce Precast into other WTS facilities through our Product Spread strategy, which remains a core component of our long-term growth plan. In Product Spread, we bid on $66.1 million of projects and booked a total of $10.7 million in 2025, up from $9.1 million in 2024. This initiative has helped improve capacity utilization at our Precast plants and has continued to gain traction at our Geneva plants in Utah, where we booked approximately $2.1 million of Park-related projects in 2025. Currently, we are advancing efforts to expand Park and other Precast-related products to additional Water Transmission Systems locations. Looking ahead to 2026, our goal is to book $11.7 million of Product Spread-related projects beyond the Product Spread. We are also investing directly in plant capabilities to support future growth, such as enhancing production capabilities at Geneva with the installation of a new catch basin machine at our Orem plant. In addition, we are advancing efficiency initiatives at Park by evaluating additional Precast infrastructure capabilities at our Ferris plant to broaden the product offering and improve absorption. And we are investing in new forms and equipment at our WTS plants to support Precast production and further advance our Product Spread strategy. In parallel with these organic investments, we continue to pursue disciplined M&A opportunities in the Precast-related space that would accelerate progress on our Precast strategy, expand our manufacturing capabilities and production efficiencies, and broaden our geographic reach and product portfolio. To that end, we are pleased to announce that we have completed the acquisition of Boughton Precast, a single-site Precast producer in the high-growth Pueblo, Colorado market. This acquisition is directly in line with our strategy to establish a beachhead in markets where we have strong interest in expanding. We believe the Colorado market has significant long-term growth potential. And while this facility is relatively small today, we see meaningful opportunity to grow its capabilities and footprint over time. Consistent with this approach, we are continuing to evaluate both single plant and larger acquisitions to accelerate Precast expansion and support long-term growth. Our other capital priorities include paying down debt and returning value to shareholders. In 2025, we repaid $27.4 million of debt, ending the year with significant liquidity. At the end of 2025, we had $276,000 drawn against our credit facility. We also repurchased approximately 425,000 shares at an average price of $43.33, totaling $18.4 million for the full year 2025. I will now turn to our outlook for the first quarter of 2026. In our WTS segment, we expect higher revenue compared to the first quarter of 2025, driven by a more favorable volume and product mix despite the adverse impact of normal weather-related seasonality, which has resulted in some unscheduled downtime across 3 WTS facilities earlier in this quarter. Even with these factors, we expect margins to be higher than the first quarter of 2025. We entered 2026 with a robust WTS backlog and elevated bidding levels, providing strong visibility into the near-term demand. As such, we anticipate full year bidding levels to be relatively consistent with the strong levels seen in 2025. We remain encouraged by the level of activity across current and upcoming Water Transmission projects, which are coming with improved economics and margins. For a more complete view of these projects, please refer to our investor presentation on our website. We entered 2026 with a stable and healthy order book, and we expect a stronger year for the Precast business. Both non-residential and residential demand remain healthy, supporting continued momentum across our Park and Geneva platforms. For the first quarter of 2026, we expect Precast revenue to be higher than the first quarter of 2025 with improving margins driven by solid demand, higher production levels with improved absorption and a strengthening order book. While weather can always affect the start of the year, we expect the first quarter on a consolidated basis to be stronger than in recent years and believe that we are well positioned to deliver a very strong year in 2026. Before I conclude, I'd like to highlight the recent strategic leadership promotions we announced to position NWPX for continued growth and operational excellence. Michael Wray has been promoted to Executive Vice President, assuming operating and commercial oversight for both the WTS and Precast segments. Mike has been instrumental in advancing our Precast strategy and supporting the acquisitions of NWPX Geneva and NWPX Park. Mike also has significant experience in operating multiple WTS facilities at NWPX. He has been with the company since 2007 and will succeed Miles Brittain, who will retire in April and is assisting with the transition priorities. We thank Miles for his many years of contributions and wish him well in his next chapter. Next Eric Stokes has been promoted to Senior Vice President and WTS Group President. Since joining NWPX in 2008, Eric has played a critical role in strengthening performance across the WTS segment. Eric has been very instrumental in implementing many improvements that have propelled the WTS business to its current level of performance. Jesus Tanguis has also been promoted to Senior Vice President and General Manager of Precast after joining the company in January of 2024. He will oversee operating and commercial activities for both NWPX Geneva and NWPX Park. And finally, Justin Fraughton has been promoted to Vice President and General Manager of NWPX Geneva, providing commercial and operating oversight for our 3 Utah facilities. Justin began with NWPX Geneva in 1998 and has taken on roles of increasing responsibility, most recently serving as multisite operations manager. We are proud of our ability to promote from within and continue building a leadership team capable of scaling our operations and positioning NWPX for our next phase of growth. To close, I'm extremely proud of what we were able to achieve in 2025 across our financial, operational and safety metrics. Our teams delivered exceptional execution throughout the year, and I want to thank everyone at NWPX for their commitment to our strategy and to maintaining a strong safety culture. With a strong WTS backlog, constructive bidding environment and a healthy Precast order book, we believe the foundation we built positions NWPX to deliver another very strong year and enhanced shareholder value. As we look ahead, our near-term priorities remain: one, maintaining a safe and rewarding workplace; two, focusing on margin over volume; three, intensifying our pursuit of strategic acquisitions; four, implementing cost efficiencies across the organization; and five, returning value to shareholders when M&A opportunities are limited. I will now turn the call over to Aaron to walk through our financials in greater detail.

Thank you, Scott, and good morning, everyone. I'd like to echo Scott's remarks as we recognize another consecutive year of record-setting safety performance. Safety remains central to our values and is believed to have a direct relationship to the record financial results I'll review today. Thank you to everyone for keeping safety priority again this year. I'll now turn to our profitability. Consolidated net income for the fourth quarter was $8.9 million or $0.91 per diluted share compared to $10.1 million or $1 per diluted share in the fourth quarter of 2024. The year-over-year decline in reported results is driven primarily by nonrecurring items, most notably a $1.8 million pension termination settlement loss recorded in 2025, which was unique to the year. Both periods also reflect benefits recorded in the tax provision from the lapse of statutes of limitations related to previously uncertain tax positions, although the 2025 benefit was less than half of what was recognized in 2024. Excluding these items from both quarters, adjusted net income for the quarter increased to $9.1 million or $0.93 per diluted share compared to $7.8 million or $0.77 per diluted share in the fourth quarter of 2024, reflecting a year-over-year increase of 16.6%. I encourage you to refer to the corresponding reconciliation of these adjustments in our earnings release. For the full year 2025, consolidated net income was a record $35.4 million or $3.56 per diluted share and included the unique items previously referenced for the fourth quarter. This compared to $34.2 million or $3.40 per diluted share in 2024. Excluding those items from both years, the 2025 adjusted net income increased to $35.6 million or $3.59 per diluted share compared to $31.9 million or $3.17 per diluted share in 2024, a year-over-year increase of 11.7%. Our fourth quarter consolidated net sales increased 5% to $125.6 million compared to $119.6 million in the year ago quarter. Water Transmission Systems segment sales in the quarter increased 1.8% to $84 million compared to $82.5 million in the fourth quarter of 2024. This growth was driven by a 26% increase in selling price per ton due to changes in product mix, which was partially offset by a 19% decrease in tons produced, resulting from changes in project timing. Precast segment sales in the fourth quarter increased 12.2% to $41.7 million compared to $37.1 million a year ago. Our performance was driven by an 8% increase in selling prices due to changes in product mix and a 4% increase in volume shipped. The products we manufacture are unique and the average sales prices for both of our operating segments as well as the Precast shipment volumes and the Water Transmission systems production volumes cannot be relied upon as comparable metrics between periods due to variations in product mix. Our fourth quarter consolidated gross profit increased 19.2% to $26.8 million or 21.3% of sales compared to $22.4 million or 18.8% of sales in the fourth quarter of 2024. Water Transmission Systems gross profit increased 20.6% to $17.8 million or 21.2% of segment sales compared to gross profit of $14.8 million or 17.9% of segment sales in the fourth quarter of 2024, primarily driven by higher pricing. Precast gross profit increased 16.6% to $9 million or 21.5% of segment sales from $7.7 million or 20.7% of segment sales in the fourth quarter of 2024, primarily due to changes in product mix. Selling, general and administrative expenses for the quarter increased 15% to $13.7 million compared to $11.9 million in the fourth quarter of 2024 due to higher incentive compensation and wage expense. For the full year, SG&A expenses increased 11.9% to $52.8 million or 10% of consolidated net sales compared to $47.2 million or 9.6% of sales in 2024 due to higher performance-based incentive compensation, wages and benefits. For the full year 2026, we estimate our consolidated selling, general and administrative expenses to be in the range of $52 million to $54 million. Depreciation and amortization expense in the fourth quarter of 2025 was $4.9 million compared to $4.8 million in the year ago quarter. For the full year, depreciation and amortization expense was $19.4 million compared to $19 million in 2024, and we expect depreciation and amortization expense to be approximately $20 million to $22 million for the full year 2026. Interest expense decreased to $0.4 million from $0.9 million in the fourth quarter of 2024 due primarily to a decrease in average daily borrowings. For the full year, interest expense decreased to $2.6 million compared to $5.7 million in 2024. And for the full year of 2026, we expect interest expense to be approximately $1 million to $2 million. Income tax expense for the full year 2025 was $11.1 million, resulting in an effective income tax rate of 23.8% compared to $8.2 million in the prior year or an effective income tax rate of 19.3%. Our effective tax rate for 2025 and 2024 was primarily impacted by the realization of uncertain income tax positions due to the lapse and statutes of limitations from the year the tax attribute originated. We do not expect to realize similar attributes in 2026 and therefore, expect our tax rate for the full year to be within the range of 26% to 27%. Next, I will transition to our financial condition. As of December 31, 2025, we had $0.3 million of outstanding borrowings on our credit facility, leaving essentially the full borrowing capacity on our credit line. For the quarter, net cash provided by operating activities was $36 million and remained relatively consistent with the fourth quarter of 2024. For the full year 2025, we generated net cash provided by operating activities of $67.3 million, a 22.2% increase from the $55.1 million in 2024, primarily due to a $13.4 million increase in cash provided by net income adjusted for noncash items. Our capital expenditures for the fourth quarter were $5.2 million compared to $4.2 million in the fourth quarter of 2024. For the full year, our CapEx totaled $20.2 million compared to $20.8 million in 2024. For the full year 2026, we anticipate our total CapEx to be in the range of $20 million to $24 million, including approximately $6 million in various investment projects, most notably to support Precast Product Spread as well as other initiatives to grow our Precast segment businesses. Accordingly, we generated positive fourth quarter free cash flow of $30.8 million compared to $31.9 million in the year ago quarter. For the full year, free cash flow totaled $47.1 million, which exceeded our expectations and compared to $34.3 million in 2024. For the full year 2026, we anticipate free cash flow to range between $40 million and $46 million. As we've emphasized, consistent strong cash generation remains a top priority for our leadership team, supporting our ability to drive growth both organically and through disciplined M&A as appropriately valued opportunities arise. We remain committed to enhancing shareholder returns through our capital allocation strategy, which includes continued investment in growth-related CapEx projects, M&A including our recent acquisition of Boughton Precast that Scott highlighted, and repurchasing shares under our 10b5-1 trading plan. To close, we are extremely pleased with our fourth quarter performance, which capped another record year for the company. We entered 2026 with real momentum, supported by a strong WTS backlog, a stable bidding environment and improving trends across the Precast markets. With a strong balance sheet, ample liquidity and continued improvement in cash generation, we remain focused on driving sustainable long-term growth through disciplined capital allocation. On behalf of the entire management team, I again want to thank our employees for their commitment to safety as well as their unwavering dedication to operational excellence, both of which were central to our record results in 2025. I'd also like to thank our shareholders for their ongoing support. I will now turn it over to the operator to begin the question-and-answer session.

[Operator Instructions] Our first question comes from the line of Brent Thielman with D.A. Davidson.

Scott, I mean, good margin expansion in both segments here in the 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, but it doesn't really seem to me that they should be going backwards.

No, I don't think -- I think you see a relatively steady climb. 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 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 falloff in the non-residential market a couple of 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.

Okay. 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 color there, more to come on that front.

I think the thing about this print, it does a lot of the same stuff that Geneva does, right? Same kind of products. They do manholes, risers, RCP, 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 with -- they've got good bones to the business. They've got, obviously, their own batch plant. There's a couple of 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 2 to 3 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 make -- really make it a fourth Geneva plant because of the similarity to the rest of the Geneva business. So -- and I will say the interesting thing about this is that -- it's about 8 or 9 acres, somewhere between 8 or 9 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 to for expanding on various properties.

Our next question comes from the line of Julio Romero with Sidoti & Company.

This is Justin on for Julio. Yes. So congrats on the Boughton acquisition. Can you talk a bit about your interest in the Colorado area? And are there any roll-up opportunities in that market?

Yes. I think the Colorado area is interesting, Justin, because really, we're seeing quite a bit of expansion in Colorado. And normally, I think a lot of the expansion has been more toward the Denver County and Denver proper. But we're now seeing the El Paso County part of Colorado, which is just north adjacent to where the facility is that we bought with Boughton 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 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.

Great. 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.

Yes. I think you originally asked was the NW -- was it towards specifically NWPX or was it WTS?

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 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 that. 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 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 produced and shipped or are 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 only -- 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, 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 water to different segments of the facilities. So -- 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 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 that 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.

Yes, very exciting. I believe you just mentioned that there -- yes, I believe you had just mentioned that there were 12 projects. So just curious, were any of those projects included in the order book for the fourth quarter?

Yes. We've seen some of those in the fourth quarter order book, yes. The problem is we're under NDA. We can't really say a significant amount about these. They're pretty secretive.

Our next question comes from the line of Ted Jackson with Northland Securities.

Congratulations on another just fabulous quarter, guys. 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 the debt on the credit line pop up to $9 million, and then we'll see, call it, another $9 million in the financing section of the cash flow statement.

Yes. 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, yes, the line financing itself will be in the financing section. Obviously, the investment in Boughton will be shown up in the investing section.

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

Yes. I mean a lot of it, Ted, is really even before you get to like the ERP and systems and things like that, you really kind of focus on culture and getting things that are most core to our culture, which, 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 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, that team's responsibility for this integration and the eventual growth of this business, which we expect to be pretty dramatic. We getting them built in by about the middle of the second quarter will be a good pace to not over inundate the employees that we have on -- the new employees that we have in Colorado, but also to be mindful of the needs that we'll have as 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 the love calories will be expended to get them integrated in and part of the fold.

You don't see much of a heavy lift to bring these guys in. It's not going to be like the -- I mean honestly the kind of some of the rig and role you had with regards to Park and just...

No, I don't think it will be that sort of exercise, right? Like Park was certainly a -- they're like Park in some ways in the sense that they're not systems focused, right? They're not -- they don't have a big, developed ERP. They don't have things that we're valuing inventory on a day-to-day basis, right? So we will build that out. But the difference between Park and Boughton will be that we have a developed system already that we use for the Geneva business that is not SAP. In this case, it's a system called Titan. And we will -- we already have that infrastructure built in for the Geneva business. So it's really just a matter of getting them familiar with the material numbers and kind of going up through the use of a system. And so a lot of it will be more of a train exercise rather than a buildup. Park was more like a build-out exercise and creating something within a system that this one just won't be quite as...

Yes, actually, I mean, to be honest, not having that probably makes it all easier for you just drop it and go. So that's actually good to hear. Then here's the question, probably Scott will want to weigh in on this one. But given the guidance that you're getting for free cash flow and where your debt position is at this particular moment, I mean, there's a good chance you'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 kind of accelerate on the organic side, the things that you're doing to grow the Precast business? I mean, are you just going to buy stock? Are you going to let it just accumulating on your balance sheet? What are you thinking with that given kind of the guidance and what your capital structure is right now?

Yes. I think the idea is that the organic growth piece of the business and expanding on the plant in Tracy, California, the one in Adelanto, California and some of these other plants into the Precast business is kind of top of mind with the expansion on the organic side. 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 we -- 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. So that's kind of the sequencing of how we're viewing things as we move forward.

It's a nice position to be in, Scott. So I mean just that simple. My last question, Aaron, is just the modeling, a little tweak for me. But can you give me a percentage of steel as it was for cost of goods for the fourth quarter?

Yes. I mean we're still -- let see here, I get pulled the number, Ted. We were about 28% for the year and a little less than that for the fourth quarter. Ted, we actually [Technical Difficulty] for the quarter.

You broke up. You said what for the quarter?

About 25% for the quarter.

Okay. Wow. Okay. That's great. So -- and I want to say one last thing is I rue the day that I stepped to the sidelines with regards to Northwest or NWPX. I mean you guys -- I think you're just executing on everything. I mean you have a great wind in your sails. And it's not just the macro backdrop, it's actually the execution as well. And I just want to tell you, I made a mistake with regards to what I did with my rating, and I'm just super impressed and I'm happy for you guys. Okay?

We have reached the end of our question-and-answer session. I'd like to turn the call back over to Mr. Montross for any closing remarks.

Okay. Just a couple of things is -- a couple of 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, the thing and 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 of 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 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 really focusing on the first quarter, despite some of the weather-related impacts that we saw earlier in the year, which quite frankly, resulted in some downtime early in the first quarter for us. We are expecting to see a first quarter in both the WTS and the Precast side of the business 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, we've had some retirements. Miles Brittain, who I've worked with and around for 29 years, who we'll miss greatly, obviously 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 disciplined on execution, safety and delivering long-term value to shareholders. And 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.

Late April. So thank you very much.