NWPX Infrastructure, Inc. Q3 FY2022 Earnings Call

Greetings. Welcome to Northwest Pipe Company's Third Quarter 2022 Earnings Call. Please note that this conference is being recorded. I will now turn the conference over to Scott Montross, CEO. Mr. Montross, you may now begin.

Good morning, and welcome to Northwest Pipe Company's third quarter 2022 earnings conference call. My name is Scott Montross, and I am 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, November 8, 2022, 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 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, 2021 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 third quarter performance. Aaron will then walk you through our financials in greater detail. Consolidated net sales were $123 million, which included a $20.5 million contribution from ParkUSA. The revenue from our steel pressure pipe segment increased 20.5% year-over-year to a very strong $83.7 million. The increase was primarily due to higher production volumes and higher price levels on projects that we have in backlog, given the elevated material costs that we experienced late last year and early in 2022. Compared to the prior quarter, steel pressure pipe revenue increased 8.6% and exceeded our expectations given the less-than-expected impact from the flooding events that occurred at two of our main steel pressure pipe plants at the beginning of the third quarter. Our steel pressure pipe sales continue to benefit from the stronger bidding environment we've been experiencing in 2022 as compared to last year. As a result, our backlog has remained in or near record territory throughout 2022. At the end of the third quarter, our backlog, including confirmed orders for the steel pressure pipe segment, reached an all-time high of $347 million. This was up from $338 million as of June 30, 2022, and $273 million as of September 30, 2021. We continue to expect the bidding environment to remain healthy throughout the duration of the year, with the resulting backlog projected to remain high compared to historical standards. Regarding steel pricing levels, hot-rolled band prices steadily declined throughout the quarter, dropping to the low $700 per ton range. While this price level remains slightly elevated by historical standards, steel prices are still far below the $1,950 per ton point we saw late in 2021. In general, elevated steel prices are positive for our steel pressure pipe business. Now turning to our precast segment. Precast sales increased 158.6% year-over-year to $39.3 million, due primarily to the $20.5 million contribution from ParkUSA, along with another record revenue quarter from our pre-existing precast operations at the Geneva locations. Geneva's third quarter net sales of $18.8 million increased 24% year-over-year driven by higher selling prices due to very strong demand for our precast products as well as increased raw material input costs. While the overwhelming demand has led to continued tight conditions for cement, we believe the bulk of the supply chain challenges are now behind us. Our precast-related order book also remained near all-time highs totaling $74 million as of September 30, 2022, down only slightly from $75 million as of June 30, 2022 and significantly up from $24 million as of September 30, 2021, which did not include ParkUSA. We continue to believe our precast order book will remain fairly strong for the remainder of the year. Our consolidated gross profit increased 103.2% year-over-year to $25.1 million, resulting in gross margin of 20.4%, up approximately 580 basis points from the third quarter of 2021. As a reminder, this was negatively impacted by COVID-related production delays and associated bidding pressures. Our steel pressure pipe margins exceeded our expectations by improving 260 basis points over the prior quarter, driven by solid 2022 project bidding levels which resulted in improvements to the overall quality of our backlog and thereby, contributed to the sequential gross margin increase we saw in the third quarter from higher production levels, leading to better overhead absorption—all of which offset the impact of the severe weather events in July that forced temporary shutdowns of two of our steel pressure pipe facilities. Compared to the prior year, our steel pressure pipe margins benefited from the stronger bidding environment as well as better overhead absorption. Our third quarter precast gross margin was once again positively supported by a contribution from the acquisition of ParkUSA locations despite some challenges we experienced with the ongoing ERP implementation that I will discuss in a moment. Further, we continue to benefit from improved project pricing in our pre-existing precast operations as we implemented price increases to outpace inflationary pressures, which have driven increased costs for raw materials and transportation. Despite current economic headwinds, including rising interest rates and the potential impact on commercial and residential construction, we are cautiously optimistic that the precast business will remain fairly strong for the near term. Next, I'd like to turn to a discussion on our two-pronged growth strategy, aimed at diversifying our business to be more resilient to economic cycles. Our primary focus is on driving growth in the precast-related space. Just last month, we marked the one-year anniversary of our acquisition of ParkUSA on October 5, 2021. We have made tremendous strides and we continue to integrate the company into our culture and operations. The last major piece of our integration effort, the ERP implementation, has been a large undertaking, given the complex nature of Park's products and the sheer volume of transactions relative to our existing operations, which presented us with some challenges during the third quarter. The complexities ultimately led to some unplanned downtime, which resulted in reduced production levels and shipments that had a muting effect on both our precast revenues and gross margins for the third quarter. That said, we've continued to make good progress toward achieving full functionality of the Park ERP system. However, it is possible we may experience additional downtime in the fourth quarter as we work to achieve full system functionality. Fundamentally, the business at Park remains strong, with growing pains that are necessary to achieve our strategic growth initiatives—for instance, the completion of the ERP implementation will lay the foundation for our organic growth product spread strategy. As a reminder, by product spread, we refer to our initiative to add the production of Park products to our legacy Northwest Pipe plants and, in some cases, add products from existing Northwest Pipe facilities to Park facilities in order to expand our production and maximize overall efficiencies. During the third quarter, we made our first sales and shipments of Park products out of our Geneva locations in Utah. Through the end of the quarter, our bookings outside of Texas were up 27% year-over-year. We remain very excited about the growth potential for the Park business. Alongside the Park integration work, we also focus on expanding and automating our Geneva operations to increase production capabilities and capacity to satisfy the growing market demand for our concrete products. We have committed approximately $15 million for a new RCP manhole facility at our Salt Lake City, Utah plant. The original construction timeline for this project has been extended due to building construction delays and extended lead times. We currently expect the project to be completed in the second half of 2023. The second prong of our growth strategy is to continue maximizing our steel pressure pipe water transmission business to drive enhanced shareholder value. Our third quarter results demonstrate our continuous effort towards maximizing steel pressure pipe business. Keys to this effort are cost reductions, lean manufacturing, and a focus on margin over volume. In addition, we are continuing to explore opportunities to further reduce costs, maximize margins, and become as efficient as possible. Before I conclude, I would like to discuss progress on some current and upcoming water transmission projects that are bidding in the steel pressure pipe market. Money from the HR 36.84 Infrastructure Investment and Jobs Act, signed into law in November 2021, has made its way down to the project level and is helping to provide a reliable stream of bidding activity. The law included $55 billion in federal funding for relevant water transmission infrastructure projects over the next five years. In the Eastern markets, the ongoing multi-year Houston surface water program is bidding 12,000 tons of pipe this month and is expected to bid multiple segments in 2023, representing 4,100 tons for the West and North Harris County regional water authorities. The next new reservoir being built in Texas is Lake Ralph Hall for the Upper Trinity Regional Water District. This is another major program currently under construction that includes a new dam and pipeline to move water into the Dallas-Fort Worth Metroplex. The pipeline is currently bidding and includes 17,000 tons of pipe. Construction on the pipeline will begin in 2023. The Alliance Regional Water Authority program in Central Texas is another multi-agency regional water program. The program includes a large pipeline, pump stations, and treatment facilities, and is currently bidding 2,700 tons of pipe with an additional 2,000 tons remaining on future segments. In North Dakota, progress continues on the 140-mile, 87,000-ton Red River Valley Water Supply Project. The first two segments were awarded to Northwest Pipe, and installation is currently underway. We are closely tracking the outcome of further budget approval for future segment construction. In the Western markets, California's Prop 1, a $7.5 billion bond for water infrastructure, has created much-needed funding for projects within the state. The following four Prop 1 projects are expected to start construction in the next five years. First, the site's reservoir is a water storage project that has received funding from Prop 1. It will involve over 30 miles of 144-inch pipeline. Additionally, site's reservoir received $30 million in IIJA funding this past quarter. Second, Harvest Water is a program intended to provide recycled wastewater for agricultural use in Sacramento. This program includes nearly 25 miles of 30- to 66-inch pipeline. Third, LoxVicaro's reservoir expansion program provides a substantial capacity improvement to the existing reservoir and conveyance facilities in Northern California. The program includes approximately 22 miles of 48- to 96-inch pipe. And fourth, Willow Springs Water Bank will create 500,000 acre-feet of underground water storage in the Antelope Valley. The project includes approximately 16 miles of 30-inch to 84-inch pipe. Other water rev programs have generated new opportunities in the California market, on which we expect to see bidding activity continue for the foreseeable future. MWD is heading a regional reuse pilot project in conjunction with the LHC annotation district. This reuse program would 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 two years. Preliminary design and permitting is ongoing, and construction of the full-scale treatment and conveyance facilities could begin as early as 2025. MWD secured a $224 million refill loan in October of 2021, which will fund nearly 50% of the anticipated construction cost. Southern Nevada Water Authority is a Las Vegas water wholesaler and Colorado River water user that has also pledged significant financial support for this program. The MWD PCCP rehabilitation program will result in about 5,000 tons annually over the next 10 to 15 years. This program includes 81 miles of pipe from 75 to 120 inches in diameter. 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 Utah, design and permitting continues on the 150-mile 69-inch Lake Powell pipeline. This pipeline will provide an alternative source of water for Southern Utah. Construction is proceeding in earnest in New Mexico on the U.S. Bureau of Reclamation Navajo-Gallup supply program. The final major phase of the pipeline construction for this program was advertised to bid this December and includes 3,800 tons of steel pipe. In New Mexico, Governor Grisham recently announced $160 million IIJA funding for the Eastern New Mexico rural water system. This 20,000-ton program would convey water via steel pipe from the reservoir in Northern New Mexico south to water users in the Greater Clovis area. In summary, we are very pleased with our teamwork and operational execution against our strategic plan in the third quarter, which resulted in strong financial performance supported by the strength that we've seen in steel pressure pipe bidding activity as well as continued strong demand for our high-quality precast concrete products. Our outlook for the remainder of 2022 remains positive, aside from the typical fourth quarter seasonality we experience due to weather and holiday-related closures. Underlying demand is projected to remain fairly strong for the near term. As such, we expect fourth quarter steel pressure pipe margins to be relatively in line with the third quarter of 2022, and our fourth quarter precast margins to be directionally flat to slightly down from the third quarter levels as we enter into the traditionally slower time of the year for precast infrastructure products at Geneva. We continue to anticipate steel pressure pipe bidding activity to be approximately 50% higher for 2022 compared to 2021 levels. Looking ahead, we will remain focused on finalizing the integration of ParkUSA as quickly and efficiently as possible, persistently focusing on margin over volume, continuing to implement cost reductions and efficiencies at all levels of the company, and continuing to identify strategic opportunities to grow the company once we have completed the integration work with ParkUSA. Thank you to all of our Northwest Pipe employees for your strong performance during the quarter and your commitment to work 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 with our third quarter profitability. Consolidated net income was $10 million or $0.99 per diluted share compared to $4.9 million or $0.50 per diluted share in the third quarter of 2021. Our consolidated net income in the third quarter of 2022 included $0.8 million in amortization expense specific to ParkUSA, which added $0.2 million in associated tax expense, resulting in adjusted net income of $10.5 million in the third quarter of 2022 or $1.05 per diluted share compared to $5.4 million or $0.54 per diluted share in the third quarter of 2021. Adjusted net income is provided for comparability purposes. Please refer to the reconciliation of non-GAAP financial measures in our earnings release for a comprehensive schedule detailing the adjustments for each period. Consolidated net sales increased 45.3% to $123 million compared to $84.6 million in the third quarter of 2021. The steel pressure pipe segment sales increased 20.5% to $83.7 million compared to $69.4 million in 2021, driven primarily by a 17% increase in our tons produced mainly due to changes in project timing as well as a 3% increase in our selling price per ton resulting from changes in product mix. Precast segment sales increased 158.6% to $39.3 million compared to $15.2 million in the third quarter of 2021, primarily due to the $20.5 million contribution from ParkUSA operations. In addition, segment sales benefited from a 24% increase in sales at our pre-existing precast operations resulting from a 49% increase in selling prices on continued strong demand for our concrete products, coupled with increased raw material input costs, which were partially offset by a 17% decrease in volume shipped due to changes in product mix. Due to the unique nature of the precast products we manufacture, shipment volumes and corresponding sales prices do not always provide comparable metrics between periods as they are highly dependent on the composition of the mix of products shipped. Consolidated gross profit increased 103.2% to $25.1 million or 20.4% of sales compared to $12.4 million or 14.6% of sales in the third quarter of 2021. Steel pressure pipe gross profit increased 60.5% to $14.2 million or 17% of segment sales, largely due to increased production volume, as well as higher selling prices. This compares to a gross profit of $8.8 million or 12.7% of SPP sales in the third quarter of 2021. Precast gross profit increased 210.4% to $10.9 million or 27.8% of precast sales from $3.5 million or 23.1% of segment sales in the third quarter of 2021, primarily due to the contribution from ParkUSA as well as higher selling prices realized at our pre-existing precast operations. As Scott mentioned, our ParkUSA business was negatively impacted during the quarter by the ongoing ERP system implementation project. As implementation continues to improve, we expect to see a lesser degree of inefficiencies resulting from this project in the fourth quarter. Selling, general and administrative expenses increased 91.5% to $10.7 million or 8.7% of sales compared to $5.6 million or 6.6% of sales in the third quarter of 2021. The increase was primarily due to the addition of ParkUSA, which added $1.5 million primarily in compensation-related costs, along with $0.8 million in higher amortization expense. We also incurred an additional $3.1 million in other company-wide compensation-related expenses as well as $0.2 million in higher travel costs which were partially offset by $0.5 million in lower professional fees compared to the third quarter of 2021. For the full year 2022, we now expect our consolidated selling, general, and administrative expenses will be in the range of $41 million to $42 million. Company-wide depreciation and amortization expense was $4.3 million in the third quarter of 2022 compared to $2.9 million in the year-ago quarter. We expect depreciation and amortization will be in the range of $17 million to $18 million for the full year 2022. Interest expense increased to $1 million in the third quarter of 2022 compared to $0.1 million in the third quarter of 2021. As of September 30, 2022, approximately 57% of total debt was susceptible to variable interest rate risk. Our 2022 third quarter income tax expense was $3.6 million, resulting in an effective income tax rate of 26.3% compared to $1.9 million in the third quarter or an income tax rate of 27.9%. The effective income tax rate for both quarters were primarily impacted by nondeductible permanent differences. We expect our full year 2022 tax rate will approximate 26%. Now transitioning to our financial condition. Our improved profitability helped us generate net cash provided by operating activities of $15.3 million during the quarter compared to net cash used in operating activities of $18.7 million in the third quarter of 2021. Capital expenditures totaled $3.3 million in both the third quarter of 2022 and 2021. We currently anticipate our total CapEx to be in the range of $25 million to $26 million for the full year 2022, which includes approximately $10 million in investment CapEx for a new reinforced concrete pipe mill as well as other standard capital replacement projects. As of September 30, 2022, we had $71.8 million of outstanding borrowings on our credit facility, leaving approximately $52 million in additional borrowing capacity. We also initiated $3.5 million in new borrowings in August on an interim funding agreement. The interim funding is anticipated to convert to a term loan upon the final delivery and commissioning of our new reinforced concrete pipe mill. The debt is currently classified as a short-term liability; however, the balance sheet classification will be reevaluated upon final loan funding. In summary, I'm very pleased with our recent financial results, specifically what has been achieved over the last two quarters. Regardless of a slower start to 2022, we have not had a year like this one since 2008. We were a significantly different company then, and I would like to thank all of our employees who have seen the company through that dramatic transformation. I'd also like to thank our shareholders for their continued support. We remain committed to driving long-term growth and enhancing shareholder value for the remainder of this year and beyond. I will now turn it over to the operator to begin the question-and-answer session.

Our first question is from Brent Thielman with D.A. Davidson. Please proceed with your question.

Hi, thanks. Good morning, Scott, on the pressure pipe business. I think there was some anticipation that the backlog might sort of shrink here into the second half as you start to ramp up production, but I guess, encouragingly, it picked up. Just wondering maybe what's been the surprise there, whether that was selection on a major program, maybe you didn't anticipate maybe some pull-in bids that you might that might come in later that ultimately fell into the quarter, just some thoughts around that and maybe directionally where you see ahead in the near term?

Yes. I think that's a good question, Brent, because as we originally talked about the backlog at the beginning of the year, we thought that the first quarter was going to end up being the high point in the backlog. But we've seen that backlog stay in a relatively tight range for steel pressure pipe. We've had some projects pull into 2022 due to some of the project timing and specifications and the capabilities that we have; we've had a few more projects that we've won during that time period. Therefore, the backlog has been pretty consistent, and we think that through the end of the year, it's going to remain in a relatively tight range, positioning us to come into 2023 strong on the steel pressure pipe side. So we are pretty pleased with the situation on steel pressure pipe.

Yes. Yes. That's good to see. And then it looks like you're still recognizing positive pricing and pressure pipe in the third quarter. When do you think that we start to see the flow through of lower pricing just related to the steel cost declines you talked about? And I guess, Scott, the next question would be, I think about the sheer volume of bids and opportunities that are out there. Is that enough to offset what I would anticipate is some pressure on the pricing side of pressure pipe?

Okay. So what I would say, Brent, is when you look at the backlog, we're already seeing some of that steel price drop in the backlog. It's already in there. But what we have on steel pressure pipe is the backlog right now, which is about 23% higher than it was at the end of the second quarter in tons. So we've got a significant amount of tons in the backlog. Incidentally, we also got a relatively large reinforced concrete pipe job at our Tracy plant, which is in our backlog too; Tracy does some reinforced concrete pipe, and they just got another major project there. So I think the tons of backlog and production levels are improving. We're seeing prices on steel coming down, so project prices are moderating down. The volume, the sheer volume being run is starting to offset that a bit, plus because of the bidding, some of the bidding has pretty good margins in it just because so much is being bid. As far as the steel price flowing through, I think what we see ultimately is not really an impact on gross margins but more of an impact on gross profit dollars because you're really dealing with maybe smaller revenue numbers. Right now, it all looks really positive. I think the volume is offsetting some of the price decline, and we're expecting a pretty good fourth quarter on steel pressure pipe too. And normally, it gets a little dicey in the fourth quarter because of the weather and holidays, but it's looking pretty solid right now.

Yes, that's great. Maybe just one more. It looks like, notwithstanding the ERP challenges, precast contributions are still fantastic. I guess just sort of a two-part question for me, Scott; would you have expected that business to see a pickup from the second quarter to the third quarter from a revenue perspective? Just to get a sense of the impact that this implementation was having?

When Aaron and I have looked at it, we think that probably the second and third quarters, without the impact of the ERP system implementation, would have probably been pretty similar. I think what we figured out is that it probably affected the revenue somewhere in the area of about $4 million and maybe 500 basis points on the margin. There was that impact. But it's kind of one of those things we're going through the growing pains with the company, and this stuff is pretty systems-related. We've got to go through this and get the thing done. However, the park business is still very strong.

Hi, good morning. Scott, Aaron, one of the things that you were striving for was to have some continuity in quarter-to-quarter results. I'd just note that Q2 and Q3 are almost identical in the results, not suggesting you could do that every quarter, but congratulations there.

That's what we strive for, though, David.

Okay. I wanted to ask a question about the press release that came out last week on the San Diego job. So in the press release, you're manufacturing 4,800 tons of engineered steel pipe for a project that's primarily 6.5 miles of parallel 30- and 48-inch pipeline. Is that 4,800 tons then able to translate into 6.5 miles of parallel pipeline?

Yes, roughly, yes.

And then the other thing I wanted to ask was when you say it's engineered steel pipe with cement mortar lining tape wrap coatings, is that sort of like the deluxe package? Or can you do much more to water?

It's all based on the spec that the owner has, right? Cement mortar lining is obviously a pretty common lining for steel pressure pipe; probably 70% or 75% of all the jobs we do have that. But when you put the tape coating over it, what they do is put cement mortar coating over to really protect the tape and the corrosion responsibility of the tape. They have been very cautious with that spec in here to tell you they're getting a good product.

Okay. Well, listen, you guys are doing a great job guiding the company in this new direction. The results are showing that; good luck with your ERP conversion there in Q4 and talk to you next time.

Thanks, David. Always good to talk to you.

Our next question comes from Brent Thielman with D.A. Davidson. Please go ahead with your question.

I'm back. Aaron, is there any way to give us a feel for the portion of the costs related to the ERP implementation that sort of don't repeat as we go into next year? I know that's still showing up in SG&A. I'm just trying to get a sense of what's going to be the norm for SG&A as we move into 2023 on a run rate basis? Is that cost base?

Yes, there is a little bit of incremental cost, obviously, with some extra bodies as we try to do some things. Most of those are more on the operational side. We don't have a lot of consulting costs going through. A little bit more was expensed actually in the year prior as we were doing some planning for the project. Really, what you see with SG&A, Brent, is just to pick up in incentive compensation in addition to all the stuff we brought on with Park, which is human capital related. We have some incentive compensation that fluctuates with the company's profitability; so that's a lot of the story. We made a little catch-up on that expense level in Q3 compared to the prior quarter.

Okay. It sounds like this year's run rate is something to build off of in the subsequent years here.

Yes, I think so. I mean, I think right now, there's nothing that we see as a real synergy in costs. I mean, the amortization is going to stick around, obviously. There will be some ebbs and flows. But at this point, I think what you're seeing for our SG&A at the current profitability levels are a pretty good level for what you see in the future.

Okay. And then, I mean, it does look like you were able to pay down a little bit of debt this quarter. It seems like production is going to stay at pretty high levels here over the near term. Just wondering if you think you'll still be in a position to see some loosening up in working capital in the fourth quarter as you tend to see and ultimately bring in some more cash to lower debt. Just curious how you see that playing out over the next three to six months?

Yes. I think I see some in the fourth quarter, less than what we were able to realize in the third quarter with free cash flow of about $12 million. I think we'll see a little bit in the fourth quarter. I think it does come through a little bit of a bigger wave in the first quarter. What we're looking at right now is a little bit of a counterbalance; steel prices are starting to come down. They're not really coming into the numbers that we've seen for the third quarter yet. They will come in as we progress into the fourth quarter and the first quarter of next year. But then we're also ramping up production levels. There’s a little bit of a counterbalance there that we're not quite getting the benefits of through working capital and that release of the really big buildup that really occurred back in 2021. Some of that’s released this year, but we should still see a little bit more of that into 2023, especially as prices for steel come down to the levels that they were in early 2021, which is probably around the $600 range.

Okay. Okay. And just one more on the precast side. I think Geneva tends to have a little more exposure to new housing construction. I know this isn't a question yet. But, I mean, the precast order book still looks awfully healthy. I assume that includes—looks like that includes Geneva. I don't know any feedback from the field in terms of the impacts you're seeing from that market on the business.

We're having some pretty interesting discussions around the impacts obviously on the residential market, which is where Geneva is squarely centered. When you start looking at what some of the publications are saying like the National Association of Homebuilders and the housing market index, obviously they've turned pretty negative sentiment over the last several months here. But the customers that we're talking to aren't really doing doom and gloom there, Brent. They're being cautious, but we're still seeing really low unemployment rates, especially in the markets that we serve, and labor is not getting any easier to find in those markets. I think one of the things that we're starting to recognize is that there's a massive bubble of people that are 20-something to 30 years old that are going to be looking for housing over the next two to three years. What we start to see is a little transition in how the builders are looking at things. They may have to start looking at, hey, we may have to take lower margins to offset the interest rate increases, or actually focus on building houses that are $400,000 to $500,000 instead of $800,000 or $900,000 houses. We think we may see a slowdown for a period of time related to all of this. But people are still going to need a place to live is what the sentiment is. And maybe because of the interest rates, multifamily housing or apartments may become more prevalent during that period of time. For instance, in Utah, I think Utah has the third highest metro rental rate in the country. So there’s kind of an evolution that might happen here short term. But that being said, the third quarter Geneva order book is still $5 million at the end of the quarter, higher than it was last year. Currently, as we progress through the fourth quarter, it is consistent with where we were last year. So we feel pretty good about the order book and momentum for the near term. We’ve been running such long lead times on the Geneva business that instead of maybe 10 or 12-week lead times, we have around three, four or five-week lead times for a period, which is a little easier for us to manage. There may be a little slowdown in the near term. But right now, we’re not seeing anything significant. I know that’s a long-winded answer, but it’s unfortunately multifaceted.

Yes, yes. No, all really helpful. Appreciate it, guys.

Thank you. At this time, we've reached the end of the question-and-answer session. I will turn the call over to Scott Montross for closing remarks.

I think just a couple of points to be made. As we discussed with Brent's questions, the precast infrastructure, the residential side of the business has some short-term challenges because of the interest rate impacts on residential housing. But I think as we get past this short term, there are still strong fundamentals in that business. The Park side, which is the control system, looks like it will remain strong with the growth in the non-residential side, especially since a lot of Park business is based in Texas, looking at oil prices that are starting at $85 to $90 a barrel. So that looks pretty solid going forward. I think steel pressure pipe, with the backlog at record levels and strong bidding activity that we’re seeing as we go through the last part of this year, we expect to carry a strong backlog into 2023. While we anticipate some slowdown in the residential impact on Geneva, we believe we can absorb a bit of that with the strength in the steel pressure pipe business, which is quite a reversal from what we've been seeing. There are a lot of great things going on for the company. We can say that despite macroeconomic headwinds, we expect the precast business to remain fairly strong for the near term. Despite the ERP challenges, Park continues to be strong, and it's really kind of setting up with the product spread for the future, providing really good organic growth opportunities. Steel pressure pipe appears to be as solid as I've seen it as a positioning going into next year since I've been here, and it's been 12 years. I'd like to thank everyone for joining the call today. There are a lot of things happening, many positives. I appreciate your time and attention today and look forward to speaking to you again early next year about the fourth quarter. Thank you very much.

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.