Greetings. Welcome to Northwest Pipe Company Fourth Quarter 2022 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Scott Montross. You may now begin.

Good morning and welcome to Northwest Pipe Company's fourth quarter and full year 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, March 15th, 2023, at approximately 4:00 P.M. Eastern Time. This call is being webcast and it is available for replay. As I 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 31st, 2022, which will be filed later today 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 2022 performance and outlook. Aaron will then walk you through our financials in greater detail. We generated annual revenue of $457.7 million in 2022, which was up 37.3% year-over-year and included $84.7 million contribution from our acquisition of ParkUSA. Annual revenue from our Steel Pressure Pipe segment increased 18.4% over 2021 to a record high of $307.6 million. Our Steel Pressure Pipe business continued to gain strength throughout 2022, following a slow start to the year. We experienced strong bidding activity in the second half of the year and particularly in the fourth quarter, which allowed us to continue to add to an already strong backlog. We also benefited from higher project pricing in 2022, mainly related to the long lead-time nature of Steel Pressure Pipe projects that were bid and awarded during the period when steel prices were higher. Hot-rolled band steel prices declined at a fairly rapid pace through the second half of the year, settling at just below $700 per ton in the December timeframe. Since then hot-rolled band steel prices have increased rapidly. In general, higher steel prices are positive for our Steel Pressure Pipe business. Steel Pressure Pipe production volume remained at levels that were fairly similar to 2021. Despite steel prices that declined at a fairly rapid pace through the second half of 2022, the strong bidding activity in the second half of the year allowed us to continue to improve the value and margin quality of our backlog and led to a 68% improvement in the year ending volume in backlog versus year end 2021. We ended the year with a record backlog including confirmed orders of $372 million, up from $347 million as of September 30th, 2022 and up from $290 million as of December 31st, 2021. Now, turning to our Precast segment. Annual Precast revenue increased 104.2% from 2021 to a record high of $150.1 million, primarily due to the $84.7 million contribution from ParkUSA for a full 12 months compared to an $18 million contribution in 2021 for the partial three-month period post-acquisition. Revenue further benefited from a 17.9% year-over-year increase in sales at our pre-existing Precast operations at the Geneva locations, driven by higher selling prices, given continued strong demand for our Precast products, and increased raw material input costs. Our Precast-related order book remains strong, totaling $64 million as of December 31st, 2022, up from $51 million of December 31st, 2021, which as a reminder was the first period that we included the order book for ParkUSA, but declined from $74 million as of September 30th, 2022, due to the fourth quarter being the seasonally slow time of the year for Precast, as well as the current uncertainty in the residential housing market. Our 2022 consolidated gross profit increased 94% year-over-year to a record $85.9 million, which resulted in gross margins of 18.8%, up from 13.3% in 2021, which as a reminder, was negatively impacted by COVID-related production delays and associated bidding pressures. Our 2022 Steel Pressure Pipe gross margin of 14.5% improved 250 basis points over 2021, primarily due to improved project pricing and margin quality and backlog and the solid project bidding activity throughout the year. Partially offsetting the strength in our Steel Pressure Pipe gross margin in 2022 was a $2 million product liability settlement reserve recorded in the first quarter of 2022, as well as a negative impact from severe weather events in July that forced temporary shutdowns of two of our Steel Pressure Pipe facilities. Our Precast gross margin significantly improved by 990 basis points over 2021 to 27.6% of Precast sales in 2022. The improvement was predominantly due to contributions from our acquired ParkUSA operations, despite some of the challenges that we experienced with the ongoing ERP implementation that I will discuss in a moment. In addition, we benefited from improved project pricing at our pre-existing Precast operations. As we implemented price increases to help offset inflationary pressures that have driven increase in cost for raw materials and transportation. Next, I would like to provide an update on our growth initiatives. We are intently focused on driving growth in our Precast-related space to further diversify our business and increase our resilience through economic cycles. Our top priority remains the ongoing integration of ParkUSA following our 2021 acquisition. I'm very pleased with our team's efforts throughout 2022 and want to thank each and every one of them for their hard work so far toward fully integrating Park into our operations and culture. We are continuing to work through the Park ERP implementation project. Almost a year into the project, we have encountered various challenges that have required us to take unplanned downtime at our plants during the second half of 2022, which reduced production levels and shipments, suppressing both revenue and gross profit at our Park facilities. And ultimately having a muting effect on both our Precast revenue and gross profit margins in the second half of the year. These challenges stem from the complex nature of Park products and the significant internal transactional volume inherent to Park's operations. And as Aaron will explain in greater detail shortly, we identified controlled efficiencies for our ERP implementation project. As such, we will experience additional downtime in the first quarter as we continue down the path toward achieving optimum system functionality. However, the system is currently functioning and the possibility of meaningful downtime beyond the first quarter is receding. We view these short-term challenges as system-related growing pains that are necessary in order to achieve our strategic growth initiatives. Now, I would like to turn to our organic growth strategy, which we refer to as product spread. Level 1 product spread is focused on building out capacity utilization at our Texas-based Park plants to maximize overall production capabilities. In order to accomplish this, we are focused on growing our sales outside of Texas from the Park facilities. The Park sales group has made good progress in this area in 2022 with approximately $6.5 million of orders booked outside of the state of Texas. Our objective is to continue to grow the Level 1 product spread in 2023. Level 2 product spread is geared toward producing and shipping Park products out of our legacy Northwest Pipe Plants. The pre-existing Geneva Precast operations will be the pilot location for Level 2 product spread activity. Training has begun and will significantly progress as more Park products are produced at and sold out of Geneva locations. We produced two Park product orders at Geneva in 2022 and currently have four Park product units scheduled for production at Geneva so far in 2023 and several other projects that are in various stages of bidding that would be slated for Geneva. There is ongoing work being done to introduce Park products to potential customers that are in the Geneva region. Once Park products are established at the Geneva locations, we will move on to establish these products at additional Northwest Pipe legacy plants. We remain very optimistic about the growth potential of the Park business. In addition to the ongoing Park integration work, we are continuing to invest in our Geneva operations to increase our production capabilities and capacity through expansion and automation in order to satisfy the growing market demand for our Precast products. We have committed approximately $16 million for a new RCP manhole facility at our Salt Lake City, Utah plant, which will replace an existing facility that is at the end of its use-for-life that was responsible for a considerable amount of unscheduled downtime in 2022 and that limited our production capabilities throughout the year. The new facility will be significantly more automated and will require about half the manpower of the current old machine. We expect the new facility to be operational in the fourth quarter of 2023, which reflects a slightly extended construction timeline due to building construction delays and extended lead-times. We have also installed a new batch plant in our St. George, Utah location, which was operational in mid-2022 and will aid in serving the increasing demand for our Precast products in both Utah and Nevada. While our growth initiatives are predominantly focused on driving growth in the Precast related space, we are duly focused on maximizing our Steel Pressure Pipe Water Transmission business to become as efficient as possible and to enhance shareholder value. Keys to this effort are opportunities for further cost reduction measures, a focus on lean manufacturing, and a continued emphasis on maximizing margin over volume. Next, I'd like to discuss progress on some current and upcoming water transmission projects that are bidding in the Steel Pressure Pipe market. In the Eastern markets, the ongoing multi-year, multiagency Houston surface water program is bidding 4,000 tons of pipe this year across multiple projects with additional sections planned for 2024 for West and North Harris County Regional Water Authorities. The Alliance Regional Water Authority program in Central Texas is another multiagency regional water program. This program includes large pipeline pump station treatment facilities. The final remaining 2,700 tons of pipe are expected to bid this year. In North Dakota, progress continues on the 140-mile 8,700-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 $7.5 billion bond for water infrastructure has created the much needed funding for projects within the state. The following Prop 1 projects are expected to start construction in the next five years. The Sites Reservoir is a water storage program that has received funding from Prop 1. It will involve over 30 miles of 144-inch pipeline. Additionally, Sites Reservoir received $30 million in IIJA funding this past quarter. Harvest Water is a program intended to provide recycled wastewater for agricultural use in the Sacramento area. This program includes nearly 25 miles of 30 to 66-inch pipeline. The first segments of this program were expected to bid in late 2023. Los Vaqueros' 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. 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 to 84-inch pipe. Water Reuse Programs that generated new opportunities in the state of California market on which we expect to see bidding activity continue for the foreseeable future. MWD is setting a regional water reuse pilot project in conjunction with L.A. sanitation 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 for the full-scale treatment and conveyance facilities could begin as early as 2025. MWD secured $224 million refill loan in October of 2021, which will fund nearly 50% of the anticipated construction costs. Southwest Nevada Water Authority, a Las Vegas water wholesaler and Colorado River Water user 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 2025. 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 Bureau of Reclamation's Navajo-Gallup supply project. The final major phase of the pipeline construction for this project is advertised to bid in early 2024 and includes 2,800 tons of steel pipe. In Mexico, Governor Grisham recently announced $160 million in IIJA funding for the completion of the Eastern New Mexico rural water system. Remaining pipeline segments include 15,000 tons of steel pipe to convey water from the Las Palomas Reservoir and Northern Mexico, south to water users in the Greater Clovis area. Before I conclude, I'd like to summarize our outlook for 2023. Our outlook for the full year remains positive, aside from challenges in the first quarter that are similar to the issues we experienced in the first quarter of 2022. In our Steel Pressure Pipe business, we've been seeing customer-driven delays in the first quarter affecting the production timing of near-term projects as well as severe weather events, which have led to unscheduled downtime at multiple facilities. These issues will suppress both revenue and margins in the first quarter. However, Steel Pressure Pipe backlog is very strong indicating there should be good strength as we progress through 2023. After an anticipated slow first quarter, Steel Pressure Pipe business levels are expected to normalize similar to what we experienced in 2022. In our Precast business, we are cautiously optimistic demand will remain fairly strong for the near-term despite current macroeconomic uncertainty pertaining to the residential housing market and current rate environment. Severe weather events in the first quarter have also caused unscheduled downtime in our Precast operations further suppressing our first quarter sales and margins to what is already the historically slow time of the year. Despite these factors, Precast is still expected to have a solid 2023. In summary, despite some of the complexities and challenges involved with executing our strategic growth priorities, we were very pleased to have delivered record financial results and operational performance in 2022, supported by the strength we've seen in our Steel Pressure Pipe bidding activity as well as the continued strong demand for our high-quality Precast products. We remain bullish on our future prospects for growth to increase our Precast business to a similar size as our Steel Pressure Pipe business supported by the increasing infrastructure needs in the United States. Looking ahead, we will remain focused on finalizing the integration of ParkUSA as quickly and efficiently as possible, persistently focused on margin over volume, continuing to implement cost reductions and efficiencies at all levels of the company, and continuing to identify strategic growth opportunities for the company once we've completed the integration work with ParkUSA. Thank you to our team at Northwest Pipe for their commitment to continuous improvement and strong performance and safety. 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. Before I discuss our financial results, I would like to expand on the identified efficiencies related to the system implementation project that Scott alluded to earlier. As will be reported in our 2022 Form 10-K, which will be issued later today, we identified efficiencies in business process controls specific to ParkUSA's sales and cost of sales transactions. As a result of this control weakness, there is a reasonable possibility that a material misstatement in our future interim financial statements could go undetected. Importantly, these deficiencies have not impacted the accuracy of our current or historical financial results. Our remediation plan will emphasize broader oversight of the execution of these critical business controls. Until our remediation work is complete, expanded monitoring of the ParkUSA sales and cost of sales transactions will be required to ensure continued integrity of our interim financial statements. I will provide additional updates throughout the year with the goal of having this material weakness remediated as soon as possible. Now, I'll turn to the fourth quarter profitability. After that, I will review the full year 2022 performance as well as discuss our cash flow and liquidity. Consolidated net income for the fourth quarter was $8 million or $0.79 per diluted share compared to $2.3 million or $0.23 per diluted share in the fourth quarter 2021. Our consolidated net income in the fourth quarter of 2022 included $0.8 million in amortization expense specific to ParkUSA, which net of $0.2 million in associated tax expense resulted in adjusted net income of $8.5 million in the fourth quarter of 2022 or $0.85 per diluted share. Our consolidated net income in the fourth quarter of 2021 included $2.6 million of acquisition-related transaction costs, $2.3 million of acquisition-related inventory charges, and $0.9 million for the amortization of acquired intangible assets specific to ParkUSA, which net of $1.4 million in associated tax expense, resulted in adjusted net income of $6.6 million or $0.67 per diluted share in the fourth 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 4.2% to $106.8 million compared to $102.5 million in the fourth quarter of 2021. Steel Pressure Pipe segment sales increased 0.8% to $72.1 million compared to $71.6 million in the fourth quarter of 2021, driven primarily by a 28% increase in our tons produced mainly due to changes in our project timing, partially offset by a 21% decrease in our selling price per ton, primarily due to decreased raw material costs. Precast segment sales increased 12.1% to $34.7 million compared to $31 million in the fourth quarter of 2021, primarily due to a $2.3 million increase from our ParkUSA operations. In addition, segment sales benefited from an 11.3% increase in sales at our pre-existing Precast operations, resulting from a 40% increase in selling prices on continued strong demand for our concrete products and increased raw material input costs, which were partially offset by a 21% decrease in volume shipped due to unscheduled equipment downtime and changes in product mix. Due to the unique nature of the products we manufacture, shipment volumes in the case of Precast, production volumes in the case of Steel Pressure Pipe, 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 increased 61.1% to $21.9 million or 20.5% of sales compared to $13.6 million or 13.2% of sales in the fourth quarter of 2021. Steel Pressure Pipe gross profit increased 38.2% to $12 million or 16.6% of segment sales, largely due to increased production volumes coupled with lower steel costs. This compared to gross profit of $8.7 million or 12.1% of Steel Pressure Pipe sales for the fourth quarter of 2021. Precast gross profit increased 101.4% to $9.9 million or 28.5% of Precast sales from $4.9 million or 15.9% of segment sales in the fourth quarter of 2021, primarily due to the contribution from ParkUSA and higher pricing at our pre-existing Precast operations. Moreover, Precast gross profit included $2.3 million of increased acquisition-related inventory charges in the fourth quarter of 2021. Without those, the adjusted gross margin for this segment would have been 23.3% for the year-ago quarter. While the ongoing ERP system implementation at ParkUSA has been a challenging project, the team continues to show significant progress. Our remaining issues center on entering transactions in a timely manner through the system. This in turn necessitates a higher degree of review, most notably surrounding our inventory quantities. We mitigate this risk by conducting physical inventory observations which require us to halt production and shipping activities thereby hampering our ability to achieve optimal throughput at our ParkUSA facilities. We estimate that this cost us approximately three operating days each quarter and I foresee another physical account to be required at the end of the first quarter of 2023. Selling, general, and administrative expenses increased 3.7% to $10.9 million or 10.2% of sales compared to $10.5 million for the fourth quarter of 2021. The increase was primarily due to $1.6 million in company-wide-related incentive compensation expense, $0.5 million in increased salaries and related benefits supporting the growing business, and $0.2 million higher travel costs, which were partially offset by $2 million in investment banking fees associated with the closing of the ParkUSA transaction in the fourth quarter of 2021. Depreciation and amortization expense in the fourth quarter of 2022 was $4.4 million compared to $4.3 million in the year-ago quarter. Our non-cash incentive compensation expense was $1.2 million and $0.8 million in the fourth quarters of 2022 and 2021 respectively. Now, turning to our full year results. Consolidated adjusted net income in 2022 was $33.6 million or $3.35 per diluted share compared to $16.5 million or $1.66 per diluted share in 2021. Our 2022 adjusted net income excluded $2.4 million in unique and one-time items associated with the acquisition of ParkUSA net of respective taxes. This compared to our 2021 adjusted net income, which excluded $5 million in unique and one-time items, also associated with the acquisition of ParkUSA, net of prospective taxes. Consolidated net sales increased 37.3% to $457.7 million dollars in 2022 compared to $333.3 million in 2021. Steel Pressure Pipe segment sales increased 18.4% to $307.6 million compared to $259.8 million in 2021, driven by a 20% increase in selling price per ton due to increased material costs and changes in product mix, partially offset by a 1% decrease in tons produced, which was a result of changes in project timing. Precast segment sales increased 104.2% to $150.1 million in 2022 compared to $73.5 million in 2021, largely due to the addition of ParkUSA which contributed $84.7 million in 2022 compared to $18 million in 2021. The company owned ParkUSA for just the fourth quarter of 2021. In addition, the segment realized a 17.9% increase in net sales of the pre-existing Precast operations due to a 45% increase in selling prices due to the high demand for our concrete products, coupled with increased raw material costs, partially offset by an 18% decrease in volume shipped due to unscheduled equipment downtime and changes in product mix. Consolidated gross profit increased 94% to $85.9 million or 18.8% of net sales in 2022 compared to $44.3 million or 13.3% of net sales in 2021. Steel Pressure Pipe gross profit increased 42.2% to $44.5 million or 14.5% of segment sales in 2022 compared to $31.3 million or 12% of sales in 2021 due to improved product pricing. Steel Pressure Pipe gross profit in 2022 was reduced in part as a result of a $2 million product liability settlement reserve recorded in the first quarter. Precast gross profit increased 219% to $41.4 million or 27.6% of Precast sales in 2022 compared to $30 million or 17.7% of sales in 2021 due to full year contribution from ParkUSA as well as the higher prices at our pre-existing Precast operations. To add, Precast gross profit in 2021 included $2.3 million of increased acquisition-related inventory charges. Without those, the adjusted gross margin for this segment would have been 20.8% in 2021. Selling, general, and administrative expenses increased 45.4% to $41 million or 9% of consolidated net sales in 2022 compared to $28.2 million or 8.5% of sales in 2021. The increase in SG&A expense was largely due to the addition of ParkUSA and included approximately $7 million in higher compensation-related expenses, primarily attributed to the acquired workforce; $4.5 million in higher incentive compensation expense; $2.3 million higher amortization expense; $0.7 million in higher travel costs, partially offset by $2 million in lower professional services and the investment banking costs that were transactional in nature. For the full year of 2023, we estimate our consolidated selling, general, and administrative expenses to be in the range of $42 million to $45 million. Company-wide depreciation and amortization expense was $17.1 million in 2022 compared to $13.6 million in 2021. We expect depreciation and amortization to be in the range of $17 million to $19 million for 2023. Non-cash compensation-related expense was $3.7 million in 2022 compared to $3.2 million in 2021. Interest expense increased $3.6 million in 2022 compared to $1.2 million in 2021. We currently expect interest expense between $5 million and $6 million in 2023, however, that could vary with interest rate movements and variability in working capital needs for our Steel Pressure Pipe business. Our 2022 income tax expense was $10.2 million, resulting in an effective income tax rate of 24.7% compared to $3.6 million in 2021 or an effective income tax rate of 24%. We expect our tax rate for 2023 to be between 24% and 26%. Now, transitioning to our financial condition. Our improved profitability helped us generate net cash provided by operating activities of $17.5 million in 2022 compared to net cash used in operating activities of $5.8 million in 2021. Our capital expenditures totaled $22.7 million in 2022 compared to $13.3 million in 2021. We currently anticipate our total CapEx to be in the range of $24 million to $28 million for the full year 2023, which includes approximately $6 million in remaining investment CapEx for a new reinforced concrete pipe machine as well as other standard capital replacement projects. As of December 31, 2022, we had $83.7 million of outstanding borrowings on our credit facility, leaving approximately $40 million in additional borrowing capacity. In summary, I'm very proud of our 2022 financial results. We have made considerable progress this year to position our business for long-term sustainable growth despite the headwinds many members of our team have endured related to the ERP implementation project. Your extra efforts are truly appreciated. While the resulting material weakness identified in the company's control environment presents short-term challenges, it was not an unforeseen risk at the time we were evaluating the Park acquisition given the state of the data and systems we were inheriting. We continue to believe it was a great investment for our company both financially and for the potential it has created for our future growth. I would like to thank our employees for their continued focus on workplace safety. I would also like to thank our shareholders for their continued support and confidence in Northwest Pipe. I will now turn it over to the operator to begin the question-and-answer session.

At this time, we will begin the question-and-answer session. Our first question comes from Ted Jackson with Northland Securities. Please go ahead with your question, Ted, and ensure your line is not muted.

Sorry about that. I was on mute. Yes, as I said, hi, but you didn't hear that, I actually had about a dozen question prepared. So thorough you kind of answered all. I would like to touch base maybe quickly on steel in 2022, can you give us some kind of sense in terms of what percentage of your revenue it was?

On projects, I would say that this mainly pertains to steel pressure pipe, as that is the primary focus.

That's what I'm talking about.

It's probably somewhere in the area of about 25% to 30%. So it moves the needle. It may be sometimes a little bit higher when steel prices get higher. In 2022, we started the year with really, really high steel prices. Like I guess it was $1,400, $1,500 a ton. It dropped, then went back up and then dropped all the way down to just below $700 a ton at the end of the year. Now it started low this year and it's increasing very, very rapidly right now to the point now where we've gone from some $700 a ton back up to numbers, we're looking at about $1,200 a ton. So, obviously, that starts to get built into the project pricing and the revenue as we go forward. And usually, it lags by several months, but it starts building into the project pricing. And ultimately, like we said in the script, that's actually good for us. It's positive because, obviously, higher pricing leads to higher gross profit levels, not necessarily higher gross margins, but higher gross profit levels. So we're good with higher steel prices. We just don't like a lot of volatility with steel. As long as we can get what we need, I think that's a great thing for us.

Sorry, I'm kind of multitasking. Then like thinking about 2023 in steel prices, like I do break that out of the model, around $750 a ton. What do you guys see in terms of like an average price per ton of steel? What are you thinking about?

It started off relatively low, but some of the factors we're observing suggest that prices might continue to rise for a while, particularly for hot rolled coil prices. However, after the May and June timeframe, current projections indicate a decline. Right now, we're around $1,200 a ton and noticing numerous price increase announcements from steel producers. Looking ahead for the rest of the year, it seems more likely to average around $850. So overall, the average might settle around $900 to $950.

Regarding your steel suppliers, are your orders still arriving on time? You've mentioned some supply-side issues. It's one thing if steel prices increase but you can still get the steel delivered for your projects. It’s another matter if the prices rise and they start delaying shipments. Are you experiencing any shipment delays or deferrals?

Having come from the steel industry, some delays in late shipments are just part of the business. We notice these occasionally, but they are not happening as frequently as in 2021 when it was very difficult to obtain steel. Currently, it's not a significant issue. As prices and demand increase, things might become a bit tighter, but we are well positioned with multiple steel suppliers to meet our needs, especially with what we foresee ahead. Regarding our backlog of $372 million worth of orders, we have commitments on steel for that already, so we are in good shape. It's mainly the near-term orders that can experience some variation in delivery times when things are busy, but so far, we haven't encountered much of that at all.

When you look at your first quarter and the challenges that you have, I recognize it's mainly weather-related. It's not a different side. But what are your thoughts with regards to what the revenue picture is going to look like in the fourth quarter or the first quarter of 2021…?

We do not provide guidance on revenue during these calls. We are experiencing weather issues, along with project delays driven by customers for near-term projects. As a result, revenue is expected to decrease a bit in the first quarter. However, we anticipate recovering those losses throughout the year. The challenge is that these losses cannot be compensated for within a single quarter for steel pressure pipe. After a slow first quarter, we believe we will continue on the same revenue trajectory as in 2023 for steel pressure pipe, based on our current backlog. The positive aspect is that the margins in our backlog are solid. Therefore, we are optimistic about a strong second half of 2023 for steel pressure pipe, maintaining a similar trajectory as indicated by our backlog, with comparable project levels to those in 2022.

Well, I got to say, when I look at your backlog number and I try to make adjustments to take it down to a tons level, it seems like the backlog, you've got a lot of visibility.

Yes.

Anyway, I'm going to step out of line so other people can ask questions, and I might go back.

Okay. Sounds good. Thanks, Ted.

Our next question comes from the line of Brent Thielman with D.A. Davidson. Please proceed with your question.

Hey, thanks. Good morning. Can you guys hear me okay?

Yes. We hear you great. Good morning, Brent.

Okay, great. Thanks, Aaron, for all the detail. I wanted to return to Park, as you made significant contributions in precast despite facing some headwinds with the ERP implementation. Can you clarify the impact that had in this quarter?

Brent, on the impact on the fourth quarter for ParkUSA specifically?

Yes.

Okay. We had several days of decline, which likely resulted in a loss of several million dollars in revenue. The margin potential is generally in the high 20s to around 30%, so you can calculate the losses from that. While there was a slight miss, it's interesting to note that when we acquired Park in 2021, their revenue was approximately $71 million, and this year they reached nearly $85 million despite the delays, contributing significantly to our gross profit. It's just a matter of stabilizing operations. Aaron will discuss the ERP system, but there were initial concerns about the complexity of the product during the acquisition. We devoted a lot of time to that, and I believe the facilities are now performing very well. Additionally, the Park business has not slowed down at all. The non-residential business in Texas remains very strong, fueled by population growth, with many schools, hospitals, and multifamily housing utilizing Park products such as meter vaults and backflow preventers. In fact, comparing the Park order backlog from December 2021 to December 2022, it's considerably higher. Therefore, the Park business is currently very robust.

Yes. I mean, despite the issues, the transaction has been usually accretive for you?

Yes.

I understand that there will be some lingering issues to address in the first quarter. Overall, the precast business appears to be achieving gross margins close to or above 30%, excluding these challenges. How should we view the precast margins for 2023? Are they expected to decrease from these levels, or can you maintain that?

Yes. It's interesting that when you look at things like that, Brent, because obviously, the Park business is really, really strong. And we haven't seen much impact on those margins yet. Now, the interest rate environment, if it stays like it is, could have a little impact on the margins in the Park side, the non-residential side. But in our forecast, we haven't built a lot into it. Like you said, those margins are approaching 30%. In some cases, they're a little bit above 30%. So they could end up being off a couple of hundred basis points just because of the interest rate environment and the cautiousness on the Park side of the business. What I would tell you about the Geneva side of the business is that, obviously, there's a lot of negativity right now around residential housing, but we are still seeing very, very high quote volume at Geneva. Like we saw last year, they're just not turning into orders as quickly. And I think that the reality of it is customers are being cautious because, obviously, the residential market has slowed in Utah and across the country but we don't see any doom and gloom. When we look at our Geneva backlog fourth quarter this year to fourth quarter last year, it's only down about 2% right now. And I think that there's a lot of strength in that Utah market, and a lot of momentum still based on what we saw with delays in the supply chain in 2020 and 2021. So there's momentum buildup. And we think that even you see a little bit of a slow period in that marketplace, it's going to come back relatively quickly. And right now, even with what's going on, to answer your initial question on maybe being it a little bit slower, we're not seeing any deterioration on the pricing side.

Okay. That's helpful, Scott. And on pressure pipe, when you look at the bidding pipeline, what's sort of to come over the course of the next 12 months, Scott, is there an argument that the pressure pipe business can kind of hold in that $300 plus or minus revenue level for the next couple of years? There's enough out there to support that kind of volume?

Well, what I would tell you with that, Brent, is there's a lot of that depends on the backlog you carry into the next year, right? And this big backlog really is the biggest one, I've ever seen here. But I think that is the key going into 2023. When you look at overall bidding in 2023, we're expecting it to be a little bit lower than it was in 2022, but then again higher in 2024. So could you be $300 or near $300 area over that period of time? I think, especially with what steel prices are doing because, quite frankly, right now, steel prices are moving a little bit beyond what we thought they were going to in our forecast, I think that's a pretty good possibility.

All right. Great. And then just the last one, I know you've got some pretty big CapEx plans and probably a little exhausted from tidying up the ERP system with the ParkUSA acquisition, but maybe you're just your plan to the balance sheet over the next few quarters here?

Yes. We will be concentrating on reducing our debt. Frankly, we were somewhat disappointed with our free cash flow in the fourth quarter. There are a few items that didn't come through as expected, but we hope to finalize those in the first quarter, leading to a reduction in debt. That's our primary focus right now. We are also working to complete the setup for the reinforced concrete pipe machine and handle normal maintenance capital expenditures. Therefore, we don’t see this as our main priority for 2023.

Okay. Thanks, guys. Appreciate it.

Thanks, Brent.

Thanks, Brent.

And our next question comes from the line of David Wright with Henry Investment Trust. Please proceed with your question.

Hey, good morning, guys.

Good morning, David.

Good morning, David.

A question, did you notice any tension on the standard municipal bid pipeline versus municipalities maybe putting those things on hold, trying to figure out what to do with all of their new infrastructure build money?

No, that wouldn't actually happen in the near term, David. When considering our backlog and the current projects in front of us, those are ready to proceed. Any delays we might encounter could be due to labor issues, equipment transportation, permitting, or sometimes weather. These factors are why we experience delays. The matters you mentioned regarding the IIJA and the infrastructure package would likely be a couple of years out. Projects like the sites reservoir or others we discussed are the ones that would be impacted. However, the near-term projects generally won't be affected. There is some IIJA funding currently available for an Eastern New Mexico project I mentioned earlier, but we anticipate more funding that will influence other projects set for around three years into the future. Right now, there is no tension regarding that.

Okay. So that's not slowing anything down. People aren't getting distracted?

No. Not that we can see.

Great. That's my only question. Thanks very much.

Absolutely. Thanks, David.

And we have reached the end of the question-and-answer session. I'll turn the call back over to Scott Montross for closing remarks.

Thank you all for joining our call today. Before we wrap up, I want to share a few key takeaways. The solid bidding we experienced in the second half of last year for steel pressure pipe has given us strong momentum as we enter 2023. While we faced similar challenges in the first quarter as we did last year, we anticipate maintaining a robust backlog by historical standards throughout 2023. Our precast business is expected to remain strong in the near term, particularly in the Utah market and the precast-related engineered systems market in Texas. Although we expect precast gross margins may face temporary pressures due to seasonality, severe weather, and short-term ERP-related issues impacting production levels, we firmly believe this business will perform well as we move into 2023 and beyond. Our near-term goal is to grow our precast business to match the size of our steel pressure pipe business in the next few years. After a sluggish first quarter, 2023 is looking positive. Thank you for joining the call.

And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.