Good morning and welcome to the Northwest Pipe Company, Fourth Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Scott Montross. Please go ahead.

Good morning and welcome to Northwest Pipe Company's fourth quarter and full year 2020 earnings conference call. My name is Scott Montross, and I'm the 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, March 3, 2021 at approximately 4:00 p.m. Eastern Time. This call is being webcast and available for replay. As we begin, I would 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, 2020, and in our other SEC filings for a discussion of 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 for joining our call to discuss our results. I would like to begin with a review of the year and our 2020 performance. Aaron will then walk you through our fourth quarter and full year financials in greater detail. 2020 was a highly challenging year given the ongoing COVID-19 pandemic and the significant impact that it has had on our employees, their families, our society, and the economy at large. At Northwest Pipe Company, we've always taken safety very seriously. The onset of the pandemic solidified that even further as we went to great lengths to ensure the health and safety of all of our employees, their families, and our communities as our top priority. During the past year, we've learned to be even more efficient while at the same time continuing to enable remote working arrangements and additional paid leave for many of our employees. Throughout this trying period, we've experienced operational disruptions related to the virus at our plants in the United States. However, we've been able to work through these issues and continue to produce critical water infrastructure products and ship those products on time to our customers. As you may recall, we also experienced a temporary government-mandated closure at our water infrastructure manufacturing facility in San Luis Rio Colorado, Mexico, for the majority of the second quarter due to the pandemic. However, since resuming operations in June, we were able to quickly return to and then exceed pre-COVID production levels. Now turning to our results. As of December 31, our backlog, including confirmed orders for the Northwest Pipe Legacy Business, was approximately $221 million compared to $231 million at the end of the third quarter of 2020, and $258 million at the end of the fourth quarter of 2019. The fourth quarter marks our tenth consecutive quarter with a backlog exceeding $200 million, which we believe is very strong by historical standards. Over the past 10 quarters, our backlog has fluctuated between $201 million and $276 million. Our backlog was impacted by the bidding delays that we experienced in the second half of 2020 related to the pandemic. These delays will have an effect on early 2021 and have been compounded by the adverse nationwide weather events we've experienced in recent weeks. However, I would like to reiterate that these are not project cancellations but simply delays. We view these disruptions as temporary in nature, as the current steel pressure pipe bidding schedule continues to look strong. In addition, our order book for the precast concrete business has remained elevated even during the winter months, which is seasonally the slower time of the year. Despite the current complex environment, continued strong performance in the Geneva precast business has helped increase both our revenue and gross profit dollars. We generated annual net sales of $285.9 million, which included a $44.2 million contribution from Geneva. This represents only 11 months of Geneva revenue as we completed the acquisition on January 31, 2020. Solid legacy margins and positive contributions from Geneva help drive a 7.1% year-over-year increase in our gross profit dollars to $50.5 million and a gross margin of 17.7%, up 80 basis points from 2019. These positive results demonstrate a key element in our growth and diversification strategy, which I'll elaborate on further momentarily. Revenue from our legacy steel pressure pipe business was negatively impacted by decreased production volumes related to the shifting of job timing further into 2021. While steel pressure pipe jobs have momentum, the process for permitting, bidding, and engineering projects has been taking longer due to the highly complex and fluid challenges inherent with the current macroeconomic environment. With this as a background, we expect the first quarter to be challenging due to volatility and delivery disruptions in the steel market resulting in production delays. The impact of extreme weather conditions in various parts of the country, as well as period-specific effects of bidding delays in the steel pressure pipe business. However, we are currently seeing a strong 2021 bidding calendar for the steel pressure pipe business, as well as a precast concrete order book that is strong even during the slower seasonal time of the year. As a result, we expect market conditions to stabilize as we move through the early part of 2021. Now I'd like to turn to a discussion of our two-pronged growth strategy. First, we are focused on growth in the precast concrete market. We entered this market just over a year ago with the acquisition of Geneva. Since then, the transactional nature of the precast concrete business has helped offset slower periods in our legacy steel pressure pipe business, which is exactly what the strategy was intended to do. Given our expansion and acquisition opportunities are fairly limited in the $450 million to $600 million steel pressure pipe market, we've expanded our addressable market in the U.S. to include higher product margin opportunities in the precast concrete space, which for water-related precast products specifically, is an estimated $3.5 billion to $5 billion market annually. Our ideal acquisition candidates in the precast concrete market would possess good organic growth potential, strong margin characteristics, solid asset efficiency, and a strong cash flow profile. We remain very active in evaluating opportunities with multiple potential targets. As such, we've been intently focused on building our cash on our balance sheet. We ended the year with $37.9 million in cash, exceeding the balance of $31 million on December 31 last year, which was just prior to the Geneva acquisition. As you may recall, we financed the $49.4 million acquisition of Geneva through a combination of cash on hand and a $16 million term loan with our banking partners. Our ability to essentially rebuild our cash reserves from scratch highlights our strong management of current assets. In addition, we are very pleased with how the integration of Geneva has trended over the course of the past year. We are currently in the process of commercializing new innovative RCP and manholes for use in corrosive sewer applications, which we believe have significant organic growth potential. The second prong of our strategy is to maximize our core steel pressure pipe water transmission business, which remains key. Our goal is to continue to optimize this business in order to maximize shareholder value. Over the last three years, we've made significant progress through cost reduction measures in lean manufacturing to drive further efficiencies, and we are currently working with outside engineering resources to explore opportunities for creating additional efficiencies to drive further cost reductions. I will now turn to look at current and upcoming water transmission projects. In the Texas market, the ongoing multi-year, multi-agency Houston surface water program is expected to bid multiple segments in 2021, representing 27,000 tons of pipe for the West and North Harris County Regional Water Authorities. We anticipate both authorities having additional projects representing 25,000 tons beyond next year. The next new reservoir to be built in Texas is Lake Ralph Hall for the Upper Trinity Regional Water District. This is another major program currently in design that includes a new dam and pipeline to move water into the Dallas Fort Worth Metroplex. The pipeline represents 17,000 tons of pipe. Construction is now expected to begin in late 2022 or early 2023. There is currently a bid package out for the new dam construction phase. The Alliance Regional Water Authority program in Central Texas is another multi-agency regional water program. This program includes a large pipeline, pump station, and treatment facilities and represents 15,000 tons of pipe. Construction is expected to begin in 2021 and appears to be holding the forecasted timeline. In the western market, California's Prop One, $7.5 billion bond for water infrastructure has created the much-needed funding for projects within the state. According to the California Natural Resources Agency, 95% of those funds have been appropriated for various projects as of the 2020/2021 fiscal year. We expect requirements for these projects to stretch out over the next several years. Water reuse programs have generated new opportunities in the California market, on which we expect to see bidding activity continue for the next year. We have identified three sizable projects bidding in 2021, representing 6,600 tons. MWD is heading a regional reuse pilot project in conjunction with LA Sanitation District. This reuse program will treat and recycle water from one of the largest reclamation facilities in Southern California and involves 60-plus miles of large diameter pipe. The current demonstration facility has been operating for six months, and construction of the full-scale treatment and conveyance facility could begin as early as 2025. The PCCP rehabilitation program will result in about 5,000 tons annually over the next two to three years. We have seen a slowdown in this work this year that appears to be COVID-related, so the timing of these projects has shifted to later this year. The site's reservoirs and water storage project, which has received funding from Prop One, will involve over 30 miles of 144-inch pipeline. The project is forecasted to begin in 2024 or 2025. The Southern Nevada Water Authority has begun moving forward in earnest with the expansion of the southern part of their water delivery system. This program, which has recently started preliminary design activity, will include approximately 25 miles of 78-inch steel pipe, with construction tentatively scheduled for 2024. In North Dakota, progress has slowed on the 140-mile, 87,000-ton Red River Valley Water Supply Project. The two-mile demonstration project bid in January of this year and was awarded to Northwest Pipe. The bulk of this project is dependent upon a 2021 legislative session to commit to full funding. We are closely tracking the outcome of further budget approval now in discussion at the state legislative assembly. In Colorado, we are tracking a late 2020 Record of Decision by the U.S. Army Corps of Engineers for the Northern Integrated Supply Project. If favorable, the construction of up to 150 miles of pipeline is expected to start in 2023. The project is located 60 miles north of Denver in the Fort Collins area. In summary, our employees have continued to do an excellent job of executing our strategy and doing so as safely as possible throughout a highly challenging year. The structure of our business continues to be strong. The current steel pressure pipe bidding calendar remains healthy despite delays due to broader economic uncertainty. As such, we are cautiously optimistic that 2021 will be a solid year. Lastly, we remain well positioned to continue to execute our two-pronged growth strategy given our strong balance sheet and liquidity position. As we move forward, we will remain focused on our number one priority of taking every precaution to keep our employees safe through the ongoing COVID-19 pandemic; number two, a persistent focus on margin over volume; number three, identifying strategic growth opportunities for the company; and number four, continuing to implement cost reductions and efficiencies at all levels of the company. I will now turn the call over to Aaron, who will walk through our fourth quarter and full year financial results in greater detail.

Thank you, Scott, and good morning everyone. I hope you're all staying safe and healthy. I'll begin today with our fourth quarter results. Adjusted net income for the fourth quarter of 2020 was $5.6 million or $0.57 per diluted share, compared to adjusted net income of $10.2 million or $1.04 per diluted share in the fourth quarter of 2019. Adjusted net income excludes unique unusual items and is provided for compatibility purposes. The fourth quarter of 2020 excludes $0.4 million in amortization expense of intangible assets acquired with Geneva Pipe and Precast, net of applicable taxes. This compares to $1.9 million of favorable insurance recoveries associated with the Saginaw fire, net of taxes in the fourth quarter of 2019. Please refer to the reconciliation of non-GAAP financial measures in our earnings release for a comprehensive accounting of the fourth quarter and full year adjustments. Our fourth quarter net sales decreased 4% to $69.4 million compared to $72.2 million in the fourth quarter of 2019. Geneva sales were $11.3 million in the fourth quarter of 2020. Legacy revenues decreased $14.1 million from the year-ago quarter due to a 31% decrease in tons produced due to changes in project timing. This was partially offset by a 17% increase in selling price per ton due to product mix. Gross profit decreased to $12.4 million or 17.8% of sales compared to $16.9 million or 23.4% of sales in the fourth quarter of 2019. For comparison purposes, gross profit in the fourth quarter of 2019 was elevated by $1.4 million in net insurance recoveries. Excluding this benefit, our gross profit margin for the fourth quarter of 2019 would have been 21.5%. Selling, general and administrative expenses were $5.8 million in the fourth quarter of 2020 compared to $4.6 million in the fourth quarter of 2019. The quarterly increase was primarily due to amortization and other costs from the addition of Geneva, including costs we are selectively incurring to further develop our precast business to support future growth. Now turning to our full year results. Adjusted net income was $20.9 million or $2.12 per diluted share in 2020 compared to $26.6 million or $2.72 per diluted share in 2019. For 2020 adjusted net income excludes the following one-time items: $2.6 million of acquisition-related transaction costs, $2.4 million in insurance recoveries resulting from the Saginaw fire, $2.2 million in amortization and other acquisition-related accounting adjustments associated with Geneva and the associated tax impact of the aforementioned items. This compares to adjusted net income in 2019 which excluded the following: $2.3 million in proceeds related to the favorable legal settlement associated with our former Tubular Products business, $0.6 million of acquisition-related transaction cost, as well as the corresponding tax impact for these adjustments. Net sales increased 2.4% to $285.9 million in 2020 compared to $279.3 million in 2019. The Geneva operations contributed $44.2 million in net sales in 2020. Net sales decreased at legacy facilities, primarily due to a 28% decrease in tons produced, which were partially offset by a 20% increase in selling price per ton. The decrease in tons produced was due primarily to project timing and mix in addition to a mandatory government shutdown of our SLRC facility due to the pandemic in the second quarter of 2020. The increase in selling price per ton was due to changes in product mix. Gross profit increased 7.1% to $50.5 million or 17.7% of net sales in 2020 compared to $47.2 million or 16.9% of net sales in 2019. The increase in gross profit was primarily due to the addition of acquired Geneva operations, which was partially offset by our lower contribution from our legacy business. Our 2019 gross profit was reduced by $1.6 million of incremental production costs incurred with the business interruption portion of our insurance plan. Excluding this timing difference, our gross profit margin in 2019 would have been 17.5%. Selling, general and administrative expenses increased 34.9% to $25 million or 8.7% of net sales in 2020 compared to $18.5 million or 6% of net sales in 2019. The increase in SG&A was primarily due to the addition of Geneva, including higher acquisition-related transaction costs, expenses related from the expanded workforce, and amortization expense from acquired and tangible assets. In addition, we incurred higher incentive compensation expenses in 2020. For the full year of 2020, we had an income tax rate of 25.7%. Our 2019 tax rate of 14.5% was unusually low due to changes to our valuation allowance. Based on existing tax regulations, we are expecting a 2021 tax rate between 26% and 27%. Now transitioning to our financial condition. Our balance sheet remains very strong. At December 31, total available liquidity exceeded $90 million, consisting of $37.9 million in cash and cash equivalents and approximately $53 million from our line of credit. We had $13.8 million in debt outstanding at the end of 2020. We generated cash flows from operations of $56.1 million in 2020 compared to $42.9 million in 2019. Depreciation and amortization expense was $14.6 million for the year. Our 2020 capital expenditures totaled $14 million. We currently expect our full year 2021 capital expenditures to be in the range of $12 million to $15 million consisting entirely of maintenance CapEx. In summary, we are very pleased with our 2020 financial results, especially considering the circumstances in which they were achieved. As Scott highlighted, we have cautious optimism about 2021's prospects despite some headwinds we are anticipating in the first quarter related to the recent weather events, the volatility in the steel markets, and project delays. I'd like to extend my thanks to all of our employees for their many contributions to the company's 2020 achievements, none more important than their continued commitment to safety. I'd also like to thank our shareholders for their ongoing support of Northwest Pipe.

Thank you. Our first question is from Brent Thielman from D.A. Davidson. Please go ahead.

Hey, good morning Scott and Aaron.

Hey Brent.

Hey Brent.

Hey, I guess first question. Some pretty extraordinary moves in steel prices lately. I guess first part of the question, do you feel your margins are pretty well protected for that and then the second part of the question Scott would just be that, you know assuming your selling prices are probably gone way up to offset that, can that offset a large portion of the volume declines that you are expecting early in the year?

Well, when you look at what’s going on with steel pricing Brent, really it started mainly in the fourth quarter of 2020. Actually what you have is a situation 2020 versus 2019, you know the steel price wasn't much different when you averaged for the year. It was just the fourth quarter that really started to have the impact, so that steel price and the steel that you are buying in the fourth quarter likely affects the revenues you more get into the late first quarter or early second quarter of the year where that starts coming in. Obviously after that, the longer the steel prices stay up, the higher it pushes the selling price, simply because of what the piece of the steel cost is. So on the margin side, when you're looking at it, you know we’re – when we bid our jobs, we go out and get a steel price and use that to grow with – to the customer. Generally that works pretty good. We have seen some cases with the volatility in steel and how overloaded the steel order books appear to be, that we've gone back and then there may not be steel available and we have to get it from somebody else, which has a little bit of an impact. But we have several people here that have been in the steel business for a lot of years, so we are kind of used to seeing this. The same thing really happened in 2008. So it's not something that we haven't seen before, it's just really managing your way through it. But certainly we’ll have – if the steel price stays high for an extended period of time, which it appears that it will, at least for at least another few months, then that certainly pushes the selling prices up. And what was the second part of the question Brent?

Well, Scott yeah, I assumed that selling prices would move higher and I – you know I was trying to think about that in the context that you're going to have some volume pressure it sounds like here, in the early part of the year at least and you know could that be enough to offset a big portion of that?

Yeah, I think that that's the key. The only – in the first quarter we're really seeing you know multiple things. One, is the amount of work that we actually saw slide out of 2020 and into 2021, maybe a little bit into 2022. But if you look at what really slid out of the second half of the year, by our calculations it was well in excess of $100 million worth of work, okay, so it was a big, big piece of work. So right now what we're seeing is a pretty solid bidding schedule in 2021. It's just a matter of really getting ourselves through the early part of the year and some of the weather and the steel disruptions that we saw in the early part of the year. But what I would say is – and I look at the bid log and bid calendar every week and have a bid meeting with our head of sales and our heads of operations, and that bid calendar as we go out, especially over the next several weeks, looks as good as I've seen it in a while. So in fact we've actually seen some jobs inserted into the bid calendar and other jobs actually pulled up into the bid calendar, so that's why we've got some cautious optimism about 2021.

Okay, and Scott I mean it sounds like part of the slide was in fact some of the weather that you’d seen in terms of being back to the bid calendar.

Yeah, a little bit, but I think Brent, most of the impact that we saw with job sliding and there’s still a little bit of that going on with jobs sliding around, but most of the impact that pushed jobs out of 2020 into ‘21 was really COVID-related. When you look at the first part of the year when this COVID virus really started to kick in, in the early second quarter, you had a period of time, it may have been a month and a half or so where everything kind of stopped, because people were trying to figure out how to actually do things remotely and keep work and business going. So you had stuff push out into the second part of the year. But what you had once you got into the second quarter of the year, people were able to work remotely, and they were able to do the work with the permitting, the bidding of jobs, the engineering of jobs. It started to take longer and longer, which is why you're starting to see as much slide out into 2021. You know it could be as high as $130 million that actually slid out into 2021 or early ‘22. So when you think about that, you know the – just taking a look at that, looking at like 2019, which was relatively close to a record year, the water transmission steel pressure pipe side, and looking at 2020, you know obviously some of that stuff that slid out of 2020 would have ended up being revenue in 2020 and then additional revenue in 2021 early in the year. So just looking at that for 2020, when you look at that much work sliding, that certainly makes the steel pressure pipe business a little bit larger in 2020 than it actually ended up being. So you could actually put some numbers together and kind of look at that and say, 'well, there was a significant amount of more potential there that actually slid out into 2021.'

And Scott from a, either $1 or a tons perspective, are you able to give us a little more context of how much the market could be up this year if the calendar plays out as planned. I know it’s not always the case, but…

Well, you know what I can tell you Brent is looking at the number of jobs that we have, that we have forecasted to do, in 2019 we had about 242 jobs that bid. Now that was – that’s a really big bid in the year which obviously you know resulted in a pretty large near-record year in 2019. In 2020 we had about 209 jobs that we’re bidding during that time and that probably leaked down a little bit more because some were actually leaked out at the end of the year. We're actually looking at a number right now for 2021 in the amount of jobs that are between 2020 and 2019, somewhere in about the 220 job range. So pretty strong and solid bidding that we are currently seeing this year for the 2021 bid calendar.

Okay, that's helpful. You know last one for me is just on Geneva. Any context at how much higher that order book is there? I think – I mean when you bought it, we were sort of entering this pandemic and I don't know if that’s a fair comparison you know in the last year. Just trying to think about how much the business can grow off that…

Yeah, if you look at what our results were, our revenue for Geneva for 2020, we were rated about $44.2 million. Well, that didn't include about $3 million that Geneva had in January prior to what we owned and so total Geneva business was likely in the area of about between – somewhere between $47 million and $47.5 million. You know we're expecting based on you know what's going on in the precast business that that’s to continue to grow. The order book right now that we have for Geneva is in a similar territory to what we saw last year when we were transacting for Geneva. I think the thing that we have going on for the precast business is, you know a lot of the drivers are related to population growth and housing starts. When you look at single family construction starts in 2020, that was one of the areas in the construction market that actually grew in 2020 and it's expected to continue to grow in 2021. I think we're seeing that – you know I know we're seeing it in the Pacific Northwest with how little housing inventory there actually is in the market right now in the building that's going on, then the low interest rates support that. With Geneva specific and really in Utah, you know we're seeing housing starts at least climb in the area of the national range if not a little bit higher because there's a strong net migration into Utah and the forecast is pretty robust for Utah going forward. So I think when you're looking at what Geneva could be for 2021, thinking back to when we talk to the markets about Geneva when we acquired we’re saying, 'Hey, you know it makes sense to look at a growth rate. It's probably somewhere between 3% and 4% and that probably works in this case.' I do think that the line products that are starting to be commercialized and sold into the marketplace may cause a little bit of upward potential on that also.

Okay, very helpful. Thanks for taking the questions guys.

Absolutely.

The next question is from Gus Richard from Northland. Please go ahead.

Yes, thanks for taking the questions. Just real quick, in terms of the steel market and then your ability to get the raw material, are there any disruption in terms of supply?

I would say that you can get supply. It's where it's been delivered Gus or when it's being delivered, because you know there's a few things that have gone on in the steel business over the last year. One, you got a couple of major mergers in steel, right. U.S. Steel acquires Big River and Cliffs, a mining company, acquired substantially all of the assets in North America of Mittal Steel, except I believe the one in Calvert, Alabama and previous to that at the end of 2019 they acquired AK Steel. So what you had is a situation, you've got those major mergers going on and then what we saw later in 2020, we started to see some down times being scheduled normally for normal maintenance. It really tightened the steel supply during that period of time. As a result, we saw lead times jump out and you know with the existing trade cases that are actually in place, supply got very tight. So getting it exactly when you want it has been a little bit difficult over the last probably three or four months. And when you look at pricing, you know since July of 2020, the steel prices kind of actually almost tripled. You know I think it was somewhere in the area for a hot rolled band about 465 last July and right now we're bumping into $1,200 a ton FOB the mill for steel. So when that price started going up, it created a little bit of buying panic. The production schedules got overloaded at steel mills and the availability got a little bit sporadic. So it led to late deliveries and what that causes for us is, if we had projects scheduled to run, we may have to pull that production planning schedule, put another product in its place so you have more changeovers and not running what you thought you were going to run. So things got a little bit disruptive in steel for a while, but you know we’re fine and good with high steel prices; higher steel prices, higher freight prices. Even at the same gross margins, higher gross profit dollars, so we're fine with that. But what we have a little bit of an issue with is the volatility when it causes availability and delivery issues, but as we go out through this period of time, we think that steel’s going to start to stabilize you know and you have the integration of the mergers that continues to get more traction. And then you know the higher steel prices attract more imports and ultimately that starts to balance off where the pricing is, and then we have a bunch of additional domestic capacity starting up sometime mid to late this year. So we think things are going to moderate and stabilize here, probably over the next few months, but it's been a little bit challenging.

Got it, that's very helpful. And then in terms of the first quarter, I mean we're pretty parked through the quarter and obviously there's been bad weather. Are you – through those weather delays, are those still impacting you and do you expect them to be an impact going into the second quarter?

As far as the weather delays, we were through the weather delays unless there is any more extreme weather. I mean we had three of our plants affected. Obviously the one near Dallas, Texas, was affected the most, where there was no power for you know 4.5 days and no power down there based on you know the normal weather patterns they have and the insulation levels of water pipe. Within the plants, you obviously have pipe freezing problems and you have some pipe break problems. But we were actually up and it will start running again after the fifth day, right after the power came back up, but it did disrupt us for a number of days. We had heavy icing in West Virginia. They had a part of the plant down for a couple of days. In Portland, we had up to 15 inches of heavy snow here, which is not a snow event that we're used to here. So we had issues with getting people to work, we had a little bit of roof damage to one of our buildings which has been taken care of, so we were down for a couple of days at one of our plants in Portland. Now everything is back up and moving and it's been back up and moving for just right after the storm, but it definitely caused some disruptions. And the other thing Gus, this really does is it also disrupts deliveries of raw materials a little bit more, especially steel, depending on where it's coming from, because over the road truck drivers or rail into certain areas was delayed for a couple of days, so a little bit more disruption to the delivery schedule. But everything right now is starting to get back to a little bit normal footing.

Got it. And then, you know so things have been slowed down a bit, the bidding process has been slowed down a little bit, but clearly there's demand and these projects are moving forward. Is there an opportunity for you guys to increase your output in the coming months and quarters as you know things sort of progress towards normal and is it – are the projects in a position where if you could produce more, they could use more.

Yeah you know, they – yes, we definitely have the ability to ramp up to take on projects. I think a little bit of what we're seeing right now obviously can always change and things can move, but we're seeing a little bit of projects stacking up in the bid log because of things that have moved out. You know we still have some stuff moving down the calendar a little bit, but things are stacking up and as we through this year, at least currently things look pretty positive you know, and it’s kind of in line with the way it looked last year before things started moving around and moving out. So we are still pretty cautiously optimistic on this year.

Got it, got it. And just basically, rolling all this up, you know Q1 will be very challenging. You'll start to recover in Q2. Q3 will be the big ramp quarter and then the seasonal softness and Q4. Is that sort of the trajectory you guys are thinking about?

You know that’s kind of the normal trajectory of the – both the steel pressure pipe business and the precast business. I think what you have now is the potential, at least as it sits right now, and again this could change. But you have the potential of things continuing to ramp through the year, even through the fourth quarter with what we see in front of us.

Okay, got it. Thank you for the clarity.

Absolutely.

The next question is from Mike Morales from Walthausen & Company. Please go ahead.

Hey, good morning Scott and Aaron. Hope you are staying safe and well.

Hey Mike, how are you?

Doing well, thanks. Hey folks, I appreciate the color that you guys gave. Just on your thoughts as we are thinking about the precast market and moving forward with growth in that area. If you’d indulge in it, I’d like to dig a little bit deeper into that and kind of pick your brain on what you're seeing I guess out in the acquisition market currently? If we think back to when the Geneva acquisition was announced and kind of the financial characteristics of the acquisition, you know obviously it’s played out pretty well relative to your expectations. Are there other Geneva’s out there? What are the multiples? Just help me understand what you are seeing.

Yeah, the M&A markets were pre-cash and obviously that’s our growth area that we are focused on. People that are interested in talking, companies that are interested in talking, it's been pretty positive. I think one of the things about the precast business with everything that we talked about earlier is a lot of these companies had really good 2020’s and you know forecasting really good 2021’s. But there's definitely availability out there and a lot of the availability we are seeing are Geneva-plus size, maybe potentially bigger than Geneva and some quite frankly that could be a lot bigger, so those are out there. Same thing with the margin profile of these businesses that we've looked at. The margin profile is strong. It's product mix is a little bit different than maybe what we see at Geneva. You have the water piece of that, which you know centers upon RCP and Culvert and manholes and things like that. But some of these guys also have a little bit of the precast that’s maybe non-water, like different vaults for utilities and things like that. Those margins all look very strong through 2020 and looks strong going into 2021. I mean the big thing on the multiples of what we see, we're seeing multiples still right now that are probably similar to what we saw with Geneva. I think when we finished off on Geneva the multiple is about 7.4 times, is that right Aaron? If I remember that correctly, so they are similar to that. The interesting thing is if you saw some of the news that Quikrete just announced the impending acquisition of Forterra, and Forterra is one of the big three in the precast concrete market. The other two of the big three are Rinker and Oldcastle, while Quikrete already owned Rinker. So now they have both Forterra and Rinker. They will have Forterra. It’s not scheduled to close until the fourth quarter. They must have to go through some regulatory things to close. But the interesting thing was, looking at that and the size of the multiple that they were looking at, which is significantly larger than what we've actually seen. So we're – Aaron and I are looking at that and man, that is a really – that's a really big multiple. The thing I don't see from the chair I’m sitting in is what are they going to look at as far as synergies for the company. What are they going to realize for the synergies of the company, which could be really interesting when you put the two big guys together and what synergies they create. So it may drive that, the higher multiples. So it’s a little bit, it's a little bit of a range right now. I would say with the things that we're seeing multiple-wise, depending on the size, you're seeing companies that are ranging anywhere from about 6x or 6.5x up to over 10x, but the stuff that we're looking at is more in the seven or so range.

That's really helpful and you know especially the discussion about the synergies coming from the acquisitions that you had just mentioned about. You know kind of taking that and always with the hope of a higher multiple for you guys, I'm thinking about acquisitions and…

There you go.

Would you guys be looking to – would you guys be looking to do acquisitions in the precast market, in a geographic, you know – let me be a little more of an optimist. Should I expect you guys to grow outwards from your existing footprint in order to capture synergies that you might be able to get there just knowing how geographically locked this business can be?

Best case scenario, you try to grow out geographically from the market that you are already in, which is challenging for us, and that’s best case scenario. The issue is there is not always willing buyers that are in those markets that are in geographic locals that are close to what you have right now. So you potentially end up looking at stuff in different areas, you know and ultimately trying to figure out how you piece that together and the synergies out of it. I think from the synergy side, as you put stuff together, it's really an overall management piece, it’s a back office piece, its ERP systems, it's things like that where you really start to drive the synergies as you continue to put these pieces together. But we would love to be able to grow out like from a bulls-eye geographically from where we are, but it's not always available and even the stuff that's available, it may be significantly smaller in size, and you know there may be other things in other geographic locations that might make more sense.

Right, understood and maybe just hearing that, you know it strikes me that the learning that you guys have taken from the Geneva acquisition and the integration, you know if synergies are truly just coming from the back-office functions, do you consolidate it?

I think – did we lose you? Did we lose you Mike?

Sorry about that. Can you hear me?

Yeah.

You know it sounds like some of the improvements you can make are really very repeatable, and it kind of creates almost like a formula that you guys can have here, as you look to grow that business, if you know integrate the ERP, consolidate back office synergies, margin expansion, multiple expansion, is that kind of how you guys are thinking about it?

Absolutely! That's a very consistent topic of discussion at both the senior management and the board-of-directors level right now. Those are the absolute kind of things that we're looking at.

Got it. Folks, I appreciate all the color. Exciting stuff to come. Keep up the good work.

Thanks Mike, good to talk to you.

This concludes our question-and-answer session. I would like to turn the conference back over to Scott Montross for any closing remarks.

Thank you. Thanks again for joining the call today. I'd like to conclude by reiterating that as we look at the structure of our business, it continues to remain strong. I think some of the programs that we see as potential infrastructure programs that are out there that are being worked on like the water affordability and transparency, equity and reliability bill that they're working on, could also add to bolstering this business for a long, long period of time. Despite the near-term delays that we've had into 2021, the demand remains healthy. As evidenced by our backlog, which has been over $200 million for the last 10 quarters and was still over $220 million even after all the work moving out of 2020. As we look further out to 2021, the building projected to remain very solid, our precast order book remains elevated even though we are in the slower time of the year, and we are in a very good position based on our liquidity, our continued cash generation, to continue to execute on our strategy and to continue to support the water infrastructure needs in the U.S. well into the future. So thank you to all of our employees again for their exceptional work during this very difficult year, and we look forward to speaking with everybody again on the first quarter call in early May. So thank you very much.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.