Greetings, and welcome to the Northwest Pipe Company Third Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Scott Montross, President and CEO of Northwest Pipe Company.

Thank you. You may begin..

one, finalizing the integration of ParkUSA as quickly as efficiently as possible; two, persistently focus on margin over volume; three, continuing to implement cost reductions and efficiencies at all levels of the company, four, continuing to identify strategic growth opportunities for the company once we’ve completed the integration work with ParkUSA; and five in the absence of M&A opportunities, returning value to our stockholders through opportunistic share repurchases.

Thank you to our dedicated team at Northwest Pipe for your continued persistence and execution against our growth strategy and for operating safely. I will now turn the call over to Aaron, who will walk through our financial results in greater detail..

Thank you, Scott, and good morning, everyone. I’ll begin today with an overview of our third quarter profitability. Consolidated net income for the third quarter was $5.8 million or $0.58 per diluted share compared to $10 million or $0.99 per diluted share in the third quarter of 2022.

Consolidated net sales decreased 3.5% to $118.7 million compared to $123 million in the year ago quarter. Steel Pressure Pipe segment sales decreased 3.8% to $80.5 million compared to $83.7 million in the third quarter of 2022.

The decrease, which Scott discussed earlier, was driven largely by customer-driven contract changes as well as other anomalies that impacted production timing. This resulted in a 13% decrease in tons produced, which was partially offset by an 11% increase in selling price per ton, primarily due to product mix.

Precast segment sales decreased 2.8% and to $38.2 million compared to $39.3 million in the third quarter of 2022, primarily due to an 8% decrease in selling prices due to reduced demand, which was partially offset by a 6% increase in volume shipped due to changes in product mix.

Due to the unique nature of the products we manufacture, shipment volumes in the case of Precast and production volumes in the case of SPP and the corresponding sales prices for both segments do not always provide comparable metrics between periods as they are highly dependent on the composition of the mix of our products.

Consolidated gross profit decreased 23.2% to $19.3 million or 16.3% of sales compared to $25.1 million or 20.4% of sales in the third quarter of 2022. Steel Pressure Pipe gross profit decreased 23.1% to $10.9 million or 13.6% of segment sales.

This compared to gross profit of $14.2 million or 17% of segment sales in the third quarter of 2022, primarily due to contract changes and project timing delays.

It’s important to note that while timing delays are typical for the Steel Pressure Pipe business, the magnitude of these changes reduced revenue and production efficiencies at certain plants resulting in a significant variance from our expectations for the third quarter.

Precast gross profit decreased 23.2% to $8.4 million or 21.9% of Precast sales from $10.9 million or 27.8% of segment sales in the third quarter of 2022, primarily due to changes in product mix. We have seen our commercial construction Precast markets decrease.

However, our residential Precast markets have held up better to the current pressures from the broader economy. Selling, general and administrative expenses decreased 3.9% to $10.2 million or 8.7% of sales compared to $10.7 million in the third quarter of 2022 and or 8.6% of sales.

The decrease was primarily due to $2 million in lower incentive and compensation expense, partially offset by $0.9 million in higher professional services, including ERP implementation fees and $0.7 million in higher base compensation and benefits expense.

For the full year of 2023, we expect our consolidated selling, general and administrative expenses to be approximately $44 million. Depreciation and amortization expense in the third quarter of 2023 was $4 million compared to $4.3 million in the year ago quarter, and I currently expect the quarterly run rate to continue at a similar pace.

Our noncash incentive compensation expenses were $0.7 million and $1.2 million in the third quarter of 2023 and 2022, respectively. Interest expense increased to $1.2 million compared to $1 million in the third quarter of 2022. We continue to hedge approximately half of our exposure to variable interest rates using interest rate swaps.

Due to the dramatic increase in the risk-free interest rates compared to the year ago quarter, our interest costs increased even though our average debt balance decreased from the third quarter of 2022. We expect interest expense of approximately $5 million for full year 2023.

Our third quarter income tax expense was $2 million, resulting in an effective income tax rate of 25.7% and compared to $3.6 million in the prior year quarter or an effective income tax rate of 26.3%. Our tax rates for the third quarter of 2023 and 2022 were impacted by nondeductible permanent differences.

We continue to expect our tax rate for full year 2023 to range between 25% and 26%. Now, I will transition to our financial condition.

We generated net cash provided by operating activities of $16.9 million in the third quarter of 2023 compared to $15.3 million in the third quarter of 2022 due to changes in working capital partially offset by lower net income adjusted for noncash items.

Our capital expenditures totaled $4.9 million in the third quarter of 2023 compared to $3.3 million in the third quarter of 2022. We anticipate our total CapEx to be in the range of $18 million to $21 million for full year 2023.

As of September 30, 2023, we had $58.1 million of outstanding borrowings on our credit facility, leaving approximately $66 million in additional borrowing capacity on our credit line. Before I conclude, I’d like to provide an update on the progress we’ve made with the ongoing ERP implementation and material weakness remediation projects.

With respect to the ERP implementation, we continue to meet project milestones and remain on schedule. We are working through user testing and broader training of the workforce in advance of our initial deployment of materials resource planning or MRP automation by the end of the year.

I’m proud of the team’s incremental gains in data management and business process improvement. Physical inventories are detecting fewer variances, which will reduce our dependency on these labor-intensive events. As for the material weakness remediation, this remains a top priority for management and our Audit Committee.

We have instituted more robust internal monitoring of our manual controls that failed at Park while related to revenue and cost of sales while we continue to focus on addressing specific concerns that arose from system development life cycle control failures noted last year’s audit.

Importantly, the internal control deficiencies identified have not impacted the accuracy of our current or historical financial results.

In closing, even though we encountered some anomalies that impacted our third quarter financial results, I’m very pleased with the progress our team has made position us well for a solid finish to 2023 and the year ahead. We remain steadfast in our commitment to drive long-term growth and enhance shareholder value.

I would also like to thank our employees for their continued prioritization of our safety program and express gratitude to all our stakeholders for their continued confidence in Northwest Pipe. I will now turn it over to the operator to begin the question-and-answer session..

Hey thanks, good morning, Scott, Aaron..

Hey Brent..

Good morning, Brent..

Hey, on SPP, maybe could you just talk about the nature of the delays you’re experiencing? It doesn’t sound like the isolated cases, but maybe it is.

And then I guess, Scott, kind of what gives you the confidence that the schedules into the first quarter are firm?.

Brent, I mean it was a little bit of a massy [ph] quarter on Steel Pressure Pipe, and I think the way to describe it is these are customer-driven changes in contracts and contract scope.

And – we have some projects that are design build projects, which means that you’re getting the project generally from the contract or owner before it’s fully designed. So normally, they are probably 90% or 95% designed. And when the case that we had this time was probably 80% to 85% designed.

And as a result, I mean you’re going forward with the value that you think you have with the customer going forward, but scope can change as you go through a project, normally, these will go for like a year or year and a half, sometimes even longer with these design build projects – but this was a relatively large project that was design build that actually went off and like five months to six months.

So the changes were happening quickly and ultimately, the project scope changed and reduced what the project was. That was one piece. The other piece was another build project that was design issues that was supposed to be done and made in the third quarter, that end up getting pushed into the first quarter of 2023.

And we’d see these once in a while, but these are two relatively large projects that really had an impact. And yes, we don’t see these things reappearing [Technical Difficulty] smaller scale. But generally, the design build projects don’t move as quickly as some of the things are happening now.

I think there’s a little bit of a change in the business, Brent, because obviously, we’re trying to promote change and get progress payments on stuff and get advance for steel and things of that nature. So some of these projects are starting to come out and move a little bit quicker now, which we obviously have to pay more attention to.

But that really is what caused the issue in the third quarter.

So – and what was the second part of the question, Brent?.

No. I think you’ve answered that Scott, it was really just the confidence that the schedules for these are kind of firm as we get into the early next year..

Yes, I think we’re looking pretty firm right now. Obviously, this has been a pretty small bidding year, right? If you think back of when we saw bidding years like this in the past, especially with Steel Pressure Pipe back to 2015, 2016 and 2017, I don’t probably have to remind you too much of what the margins look like in those years.

I think one of exciting things is while the quarter was disappointing, one of the exciting things is that even with markets this small, I mean these are not great margins, but they’re okay margins in a market that small, which really kind of speaks that there’s been a little bit of a change in the market resiliency based on the current configuration in the market and ultimately, obviously, due to the consolidation in the market, which we were a big part of, which really bodes well for the Steel Pressure Pipe business as we get into bigger markets, which we expect to do in 2024.

We expect that market in 2024 to be quite a bit bigger than it was in 2023. So – so I think we’re in pretty good shape with that..

Okay. Yes. And on that front, Scott, do these delays impede your ability to add new business in SPP just given that even though the production is sort of allocated, you can still fill it in..

No. Yes. I mean we have more than enough production capacity practical production capacity to probably handle most of what’s coming out in the market. Some of the timing gets a little bit daisy on projects and you can’t handle them based on things being pushed out.

But in any given quarter, we might be producing on somewhere between 50 and 100 different projects. So across all of our plants, plus obviously, we have the ability to move stuff around because we’ve got a nationwide footprint and deploy different assets unlike a lot of our competitors..

Okay. And then on Precast, I mean the sales line was sort of right as we’d anticipated, and I think you’ve been articulating maybe the margins were a little lighter than what we were thinking about.

Maybe if you good just kind of level set us on where you expect the margins for the business to be consideration of look, I mean we understand there’s some slack in some of these markets, but, just be helpful..

Yes. I think probably everybody compares things that are going on to what 2022 was. Right? In 2022, I mean those were boom – that was a boom year for Precast. There was a lot of records set in that business. Going through this year, we’re modestly off of the revenues that we saw in 2022. Obviously, the demand bit off.

You have the higher interest rates that are affecting both the residential and the nonresidential part of the market. So you have reduced production levels. And obviously, with those reduced production levels, you have lower levels of overhead absorption. And along with less demand, you get a little bit of price pressure, because we’re seeing that.

And also a product mix, we’re seeing some product mix changes in the Precast business right now versus what we saw in 2023, maybe some products that but have a little bit lower margin profile than what we saw in 2023. But all in all, I mean, I think when you start looking at where we expect to be.

I think when you look at the second quarter, our margins for the second quarter, Precast were about 25% in the third quarter, they were about 22%. So I think what you’re seeing is margins are going to be lining up with that as we go through the rest of this year.

And as we go into next year, obviously, they’re predicting some different things for next year, especially around the midpoint in the year where they think that probably the Fed is going to start loosening the interest rates a little bit mid next year.

And the markets are going to start to respond pretty positively to that, not only the housing market because there’s a shortage of housing, but also the commercial construction markets, which are a little slower right now than what we’re actually seeing in the residential side.

So, I think, again, us coming through a period like this with significant headwinds in both the Steel Pressure Pipe segment as well as the Precast segment with the headwinds that we’re seeing. And while, like I said, the quarter is disappointing, but we’re still coming through this in decent shape for the headwinds that we’re actually seeing.

So we’re pretty excited about the markets coming at us going forward..

Yes. Just my last question, it might be for Aaron. I mean the cash conversion here this year has been pretty fantastic. I guess I’m wondering if there’s anything that’s an anomaly in there and how we ought to think about that into 2024.

Is this unusual? Or can you keep up this pace because you’re going to have a balance sheet plus within cash and very little debt here pretty soon..

Yes. I think what I would say, Brent, is that one, yes, we’re performing better. I think – we have changed the focus.

So, I kind of mentioned it a little bit here and there because it’s a thing we’re continuing to work on, and we’re not where we want to be yet, but we’re making progress on really trying to get customer prepayments, especially for steel to put us in a little bit of a different working capital position on our jobs and really try to moderate the working capital needs of that Steel Pressure Pipe business.

That has been kind of a little bit of a pain point for the company in its history. And we acknowledge that, and we acknowledge that that’s something that we should strive to improve, and we’re trying to do that.

Now I’m not saying that we haven’t had a couple of good bounces in the course of this year, too, that’s kind of helped, especially in the first quarter, when I think we saw just kind of a big – I think it was like $21 million of free cash, I think, in the first quarter. So we’ve had a couple of good things.

But I think all in all, we have a little bit of a shift kind of starting on some of the customer relationship stuff that’s starting to pay some dividends for the business and its cash flows..

Yes, I think just to add a little bit to that, Brent, the progress payments, like I said, at the beginning of the market is starting to change a little bit. And obviously, we’ve been trying to drive that because of all the cash that we get tied up in current assets, especially with the Steel Pressure Pipe business.

Progress payments are something that we’re always looking at getting paid for steel especially in jobs that are long jobs that we’re having to buy steel to protect the steel price upfront to make sure that we don’t get sideways with steel pricing.

And another area of big focus especially across the company, but I think the guys on the Steel Pressure Pipe side have done a really good job of getting the AR on time up. I mean, and when you go back several years ago, I mean, we were seeing AR on times in the 40% some range. And now we’re seeing them in a lot of cases between 75% and 80% on time.

So big change there, too. It’s a big focus, right? Cash is important to us going forward to do the things that we want to do as a company to grow the company..

Very good. I’ll pass it on. Thank you. .

Thank you, Brent. .

Thank you. Our next question comes from the line of Julio Romero with Sidoti & Company. Please proceed with your question. .

Hey, good morning, Scott and Aaron..

Good morning, Julio. .

Hey, morning. You guys mentioned earlier on the Precast side that commercial construction has decreased, but residential has held up pretty well.

Should we infer that to mean that you’re seeing the ParkUSA product demand kind of temper a little bit and Geneva hold up pretty well? And is that where some of the product mix challenges you mentioned earlier are stemming from?.

I think that’s right, Julio. I think the interesting piece of this is, obviously, we’re in two really good markets on the Precast side of the business, right? The State of Texas, obviously, is always building.

They’re always spending the cash they have generated from energy type business, good – a really good market plus Utah, the net migration into Utah has been pretty solid.

And quite frankly, we’ve been actually a little bit surprised on how well that the Precast infrastructure side of the business that we have at Geneva has held up because of the pent-up demand housing wise in the Utah market. So that’s still kind of bumping along. And both of those, I would say, have only decreased modestly.

But I think that probably the impact is a little bit more right now at the Park side. But if you look at the Dodge Momentum Index, in what’s coming forward, and the momentum index it’s basically nonresidential projects going into planning. And it generally precedes spending in the nonresidential market by about 12 months.

And the September index was up about 3%. And while commercial was pretty flat. The institutional piece has gone up quite a bit. And the institutional piece is more public facing.

And we’ve seen like the commercial fall off a little bit, but institutional like educational, hospitals, things like that is really kind of a strong point in the construction side.

And right now, what they’re projecting is if the interest rates start to maybe moderate a bit by the time we get to middle of the year, that we’re probably expecting a pretty good commercial construction market next year as well as hopefully a continued strength that we’re seeing in the Precast infrastructure side.

So these are just really off modestly. And like I said at the beginning, demand is a little bit lower, not high like it was in 2022, so we’re seeing a little bit more pressure on pricing. But I wouldn’t say it’s across the board. It’s on certain things and the mixes have changed a little bit, like you said.

But all in all, I think that market is holding up pretty well based on the interest rate environment that we’ve seen over the last, what, 11 interest rate hikes that the Fed has done.

And we’re pretty excited about the way that looks going forward, too, especially with the headwinds of that have been in that business this year and how well it’s still doing so….

Great. No, that’s really good color there. I appreciate it. And then – maybe if you can speak to ERP a little bit.

Did you call out how many days downtime you might have taken in the quarter and maybe how many you expect for next quarter?.

Yes. Julio, what’s happening is, we’re starting to see a better transactional integrity through the course of the business, mostly because we’re just reinforcing process and managing our data, I think, a little bit better than we were initially say, a year ago at this time.

We’re obviously getting a lot of help from some consultants to kind of get us – kind of pull through this a little bit, but we’re virtually going to get to a place where we’re on MRP and have a little bit more automation. But I’d say as far as some of the days that we’ve been spending on inventories, that’s improved and we’re still doing inventories.

We’re obviously getting better at them so that there’s proven for that reason.

But I would say that now we’re getting to a point where going forward, we’re – especially at two of the three Park plants we’re at a stage where, due to the confidence that we have that we’re not going to have them do an inventory, because one it’s still has a little bit of work to do, I think, a little bit more of a focus.

But that’s something that I think is going to continue to improve for us going forward. So I mean, I think to this point, Julio to answer your question on the days, I would say we’ve probably spent three days of the quarter since we probably bought the Park business.

And I would say probably the year ago quarter was maybe a little bit more, because we were doing the first initial go-live for ParkUSA. So we had to do a kind of an extra inventory at the launch..

Got it. Thank you for that. And it sounds like you’re making progress there, for sure. And then just thinking about the share repurchase authorization, how should we kind of think about the cadence of you guys deploying that when you balance that with maybe debt reduction and some other cash uses..

Well, I think, Julio, the way we’re looking at it is, is the Board approved the $30 million, and we’re new at this, right? So we’ll probably begin to deploy maybe $10 million of that at a time just to start getting our feet wet of that.

We’re going to continue to work down our debt as we go Again, like you heard Brent ask the question about cash flow, we’re pretty focused on cash flow so that we can get that debt down and ultimately, to do the things that we need to do to drive shareholder value.

And really, the repurchase program is a part of our growth strategy now, right? Because there’s not always a M&A acquisition that’s either readily available or practical right because there’s not always something where you want it? When you want it? And at the value you want it, right? So it’s may not be readily available.

The other thing is when you look at the market still; they’re still relatively frothy as far as multiples in the markets, the things that we’re looking at.

So we are very sensitive to what we’re trading at and making sure that we’re doing things that are accretive to the shareholders if we’re doing an acquisition, in absence of being able to do one that makes any sense to continue to drive shareholder value, which is part of our growth strategy, we will – we may very well off to do share repurchases.

And that’s why we put that into play. So it’s definitely debt repayment. We’re not going to do anything with share repurchases that get us out of whack with our credit facility or puts us in a position where we can’t do an acquisition when we find one that makes sense. So we’re going to be pretty careful with it..

Great to hear. Thanks very much for taking the questions..

Absolutely..

Thank you. Our next question comes from the line of Ted Jackson with Northland Securities. Please proceed with your question. .

Thanks. Good morning, Scott. Aaron..

Good morning..

Good morning, Ted. .

Yes. TGIF.

TGIF, yes. .

The main question I want to ask is going back into your commentary, Scott, you had first of all, if there’s actually a presentation for the quarter, I’m not sure it’s on your website. When I go on your website, I see in a August presentation. I think it hasn’t been updated, but perhaps I’m wrong..

Yes, I think it will be updated soon. Sorry about that..

Okay. In terms of – no, it’s okay. I mean, I’m a mellow guy. In terms of questions, Scott, you had talked about a pickup in bidding activity for 2024. But because of the [indiscernible] bidding activity, if you would, in 2023, more margin pressure. And I wanted to kind of unpack that a little bit on two fronts.

And – number one is, I mean, you’ve had some nice margin business booked in your backlog that we’re seeing the benefit of. So maybe you can talk about reference back to kind of what you see the impacting of your margin structure is from that.

And then – I mean, that’s the negative side of this, but the fact of the matter is that the bidding activity for 2024 looks to be relatively robust.

How does that play out in terms of your backlog as you roll through the year? And then can maybe some color with regards to kind of the drivers behind that bidding activity? I mean, is it a result of some of the government funding coming into the market? Is it a regional thing based on states maybe some just some color around that? That’s my first set of questions..

The – to take the last one first because, I’m not sure I’m going to remember all of those, Ted. I think that the IIJA funding, a government funding starts to take a little bit more hold as we go into next year. But really, probably the bigger part of that is out at least a couple of years.

Right, it these are just projects that we’re actually seeing coming through the system. We’re in our strategic planning process right now. And we’re looking at everything that’s coming through our project tracking system, the things that are likely to bid that things that may not bid.

And obviously, when we look at those things, we give the things that we don’t think are that likely a pretty good haircut to come down. And we’ve come up with a number that’s quite a bit bigger than what we saw in 2023. So that looks good. But that’s not – I don’t expect the IIJA funding really to start really kicking in until probably 2025.

So that’s really – that’s a ways out still. This is just stuff coming through. And I think the exciting thing about this, I think I said this before, Ted, even with a really small market – and we’ve seen a couple of pretty small markets over the last couple of years. 2021 was a market similar to this size that we’re seeing this year.

And while the margins are not great, they’re still okay coming through this period. And if you look back several years ago when we had markets this size before some of the market consolidation happened, the margins were really, really ugly. So that’s a piece of the excitement that we have going forward, especially looking at bigger markets.

So when you look at margins and how those things play – and I think this is a little bit to be your first part of your question, and you’ll have to remind me about some of that.

When you get lower bidding environments like we’ve seen this year and like we saw in 2021 what ends up happening is backlog start to go down, because there’s less bidding and people putting less in their backlog. So it starts to become more of like, hey, there is starving animals there and they’re all after the piece of meat, right, at some point.

So that creates some pressure on the margin. And we’ve seen some of that over the last few months, really since probably the last earnings call, that kind of pressures things down a little bit. A lot of the stuff that we have in backlog has really good margins.

I think some of the things that create a little bit more margin pressure in specific periods of time is when you get something that moves out like the thing that we talked about earlier that moved out of the third quarter into the first quarter of 2024, you’re scrambling to find something to put in there that may not have as good of a margin and you have lower overhead absorption because of that.

So it’s a double whammy on your margins. So there’s a whole bunch of factors that go into this.

And really, our production levels in the third quarter for Steel Pressure Pipe have been pretty small, right? And again, even with them being that small in all the anomalies that we had being able to come through a quarter like that with a margin that’s just halfway decent is exciting and bodes well for how things look when the market starts to really get bigger.

So – okay, so you’re going to have to go back and remind me the other pieces of your question..

Well, it’s more of a discussion than a question and you’ve gotten into a lot of it. But if I take what you just kind of laid out to me and listen, – is it fair to say that when you’re talking about a lot of the bid activity, – this isn’t like you’re saying this isn’t a big government project.

This is more kind of smaller projects and that the fact that you haven’t had a big set of government projects, you just have a lot of people competing aggressively for this smaller business.

And that is when you talk about 2024 is you’re seeing – you’re talking about really kind of these smaller not mega projects, but smaller kind of bread and butter pieces of business that, that’s the activity that you’re talking about..

Yes. But we’re still seeing some bigger projects that are on the website in 2024. There are some big things out there. We’re just seeing more smaller ones. Generally, smaller ones don’t get as much pressure as the bigger ones. And they are generally all municipality or utility related.

So in some way, shape or form, government sponsored at least to some extent, whether it’s state or federal funding that goes into those but there’s all kinds of different dynamics. But what I’ll say is on the larger projects, Ted, those are the ones that generally get more attention and become more, what I would say, nationwide bidding attractions.

The smaller projects are more regional attractions. So unless you have one region in the country that’s really slow, those are generally how do I want to say this, a more reasonable bidding environment because they are smaller projects, but the big ones attract more attention for sure..

But I mean – and put it all together, it sounds like there’s a pickup in activity you have and then you’ve got a longer-term drive with a lot of the infrastructure funding.

And I guess the tone I’m reading is you’re moving through the end of 2023 and into 2024, feeling pretty good about the current level of business and then the longer-term demand for your services and products through 2024 and into 2025..

Yes. I think that’s right. I think the reality is, Ted, is that 2023 has been a small bidding year. 2022 was a bigger bidding year, probably maybe 30% or 35% more than 2023. 2021 was like 2023.

So we’ve had three probably okay bidding year, one okay bidding year in that timeframe and two smaller ones, and we’re still coming out the way we’re coming out, and we’re expecting bigger bidding years in 2024 and 2025, especially with the IIJA funding, which could add several thousand tons of business to your backlog during a period of time like that, depending on how these things come out.

So we’re pretty excited about how things look going forward on the Steel Pressure Pipe side with the markets that are coming at us. But I think I’d equally say we’re excited about the Precast business as well as that’s held up with the amount of headwinds that we’ve had this year.

So I think those are both positive signs and really bode well for the business as we get back into stronger markets..

Okay. Well, I’m going to end and just say, the free cash flow is what I care the most about, and I was – I’m very – I mean I’m going to point out that if you look at your year-to-date cash flow generation, you’re almost at the same level that you were in 2020. And we’ll see what happens with the fourth quarter.

But it’s great to see the success you’re having in the business, and I look forward to seeing you continue to grow that free cash flow. Now I’ll get out of line. Thanks. .

Thanks, Ted. .

Thank you. Ladies and gentlemen, that concludes our question-and-answer session. I’ll turn the floor back to Mr. Montross for any final comments..

Yes. I’d just like to say, I’d like to thank everybody again for joining us today. And obviously, we came into 2023 with a pretty high backlog, and we’ve maintained a pretty high backlog for the last several quarters. I think we’re pretty steady with that going into 2024.

I think we’re well positioned to handle significant opportunities coming up in the water transmission Steel Pressure Pipe business. And even though the precast business is off its record highs that we saw in 2022, that still remains strong. And our long-term view about the Precast business remains unchanged.

We are focused on growing in that business and growing that business in the relative near term to the similar size that we have, our Steel Pressure Pipe business. And I think – the biggest thing, again, is to reiterate, we’ve come through a year in 2023 that has had quite a bit of headwinds. Steel Pressure Pipe was a small market.

And like I said before, you look back several years ago to markets that were this size and the margin generation in those markets were really ugly.

And even though this year is a little bit disappointing or this quarter was a little bit disappointing, the margins aren’t great, but they’re significantly better than what we’ve seen in the past with markets this size, which again, I think represents more of a market resiliency based on the current market configuration and due to the consolidation that we’ve had in that market, and it really bodes well for bigger markets.

And I think it’s the same thing for Precast. I mean there’s been a lot of headwinds there, interest rates, and it’s off last year’s records highs but we’re still bumping along pretty good in a business that also has a lot of headwinds. So we’re really looking forward to these markets, continuing to grow and expand as we go forward.

We appreciate everybody’s time. And thank you, and we’ll – I guess we’ll talk to you in March. Is that it March. So thank you..

Thank you. This concludes today’s conference call. You may disconnect your lines at this time. Thank you for your participation..