Greetings, and welcome to the NWPX Infrastructure Third Quarter 2025 Earnings Call. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host today, Mr. Scott Montross, CEO. Thanks, sir. You may begin.

Good morning, and welcome to Northwest Pipe Company's Third Quarter 2025 Earnings Conference Call. My name is Scott Montross, and I am President and CEO of the company. I'm joined today by Aaron Wilkins, our Chief Financial Officer. By now, all of you should have access to our earnings press release, which was issued yesterday, October 29, 2025, at approximately 4 p.m. Eastern time. This call is being webcast, and it is available for replay. As we begin, I'd like to remind everyone that the statements made on this call regarding our expectations for the future are forward-looking statements, and actual results could differ materially. Please refer to our most recent Form 10-K for the year ended December 31, 2024, and in our other SEC filings for a discussion of such risk factors that could cause actual results to differ materially from our expectations. We undertake no obligation to update any forward-looking statements. Thank you all for joining us today. I'll begin with a review of our third quarter performance and share our updated outlook for the remainder of 2025. Aaron will then walk through our financials in greater detail. We're proud to report another quarter of record-setting results, delivering the highest quarterly revenue, gross profit, and EPS in our company's history. Consolidated net sales reached $151.1 million, representing growth of 13.4% sequentially and 16% year-over-year. Gross margin expanded by 230 basis points sequentially to 21.3%. EPS grew to $1.38 per share, up 35% versus the prior year period, and we generated over $21 million in operating cash flow during the quarter. These strong results underscore our disciplined execution against our strategic priorities and the sustained demand across both our water transmission systems and precast segments. Let's begin with our WTS segment, which delivered record net sales of $103.9 million, a 20.9% increase year-over-year. This performance was fueled by favorable market dynamics, including stronger-than-expected customer shipping requirements, project mix, and timing. Tons produced rose 14% year-over-year, driven by sustained customer demand, while revenue per ton benefited modestly from trade policy dynamics and disciplined pricing strategies. Importantly, while our strong cash flow generation in the third quarter can be attributed to the collective efforts of the entire company, the WTS business was a notable contributor. We saw this trajectory throughout 2025, with improving cash flow through the first nine months of this year versus 2024. This builds on the significant improvements we've achieved over the last few years. Bidding activity remained robust throughout the quarter, and we expect even greater momentum heading into the fourth quarter. At quarter end, our WTS backlog, including confirmed orders, stood at $301 million. While this reflects a sequential decline from the $348 million in June due to the elevated shipping activity, it marks an increase from the $282 million a year ago. We anticipate backlog levels will remain above $300 million through year-end, supported by what we expect to be the strongest bidding quarter of the year. In addition, as part of our commitment to environmental stewardship, we recently published our first third-party verified Environmental Product Declaration, or EPD, for cement-mortar line welded steel pipe. The EPD measures embodied carbon and overall product life cycle impacts and helps us meet by clean and other state-level transparency requirements. It also helps differentiate us from competitors in sustainability-driven bids. This milestone underscores our dedication to transparency and sustainability in infrastructure development. For additional details on water transmission projects underway at NWPX, I encourage you to review our investor presentation available on our website. Turning to the Precast segment. Our net sales reached $47.2 million, marking a 6.6% year-over-year increase, landing just shy of the record set last quarter. While shipment volumes declined modestly, an 8% increase in average selling price reflects our pricing discipline. We saw notable strength in our park-related nonresidential business, which has navigated persistent macroeconomic headwinds, including trade policy uncertainty and elevated interest rates. Third quarter results reflect early signs of stabilization and an improving trajectory in this business. Residential activity at Geneva moderated slightly during the quarter, partially offsetting gains. Our precast order book closed the quarter at $55 million, in line with recent levels and demonstrating consistent stability over the past several quarters. Looking ahead, we anticipate improved demand and accelerated project starts as interest rates ease. On a consolidated basis, gross profit reached a record $32.2 million, representing a margin of 21.3%, up 50 basis points from 20.8% in the third quarter of 2024. Water Transmission Systems gross profit reached $22.1 million with a margin of 21.3%, up approximately 190 basis points year-over-year and 350 basis points sequentially. This margin expansion reflects strong customer demand, favorable project pricing, and consistent operational execution, all while sustaining a healthy backlog. Free cash gross profit totaled $10 million, down modestly from both the second quarter and the third quarter of 2024, with gross margins that were flat with the prior quarter. Margins were temporarily impacted by mix shifts at Geneva and increased depreciation associated with new equipment investments. Production volumes rose year-over-year with park up double digits and Geneva up high single digits. Absorption rates are beginning to improve, and we anticipate margin recovery as nonresidential demand continues to build. Momentum within the nonresidential portion of our Precast business is showing encouraging signs of recovery and is expected to contribute positively to our margins. Let me now turn to our capital allocation strategy. Growth remains our top priority. In the third quarter, we continued to advance our Precast product spread strategy across multiple levels. First, optimizing capacity at our park plans by booking orders outside of Texas; second, producing and shipping park products from Geneva; third, producing and shipping Geneva products from park locations; and fourth, expanding precast-related offerings to additional Northwest Pipe legacy locations, which includes water transmission systems plants. We currently have two water transmission systems plants that are in the process of getting their national precast concrete association certification. We booked $3.3 million in precast product spread orders in the third quarter, and our full-year goal remains to book over $12 million in product spread projects outside of Texas. We also made targeted organic investments, including the installation of a catch basin machine at our Orem plant for Geneva, which will expand our production capabilities. Additionally, we are investing in new forms at our water transmission systems plants to support precast production and further advance our product spread strategy. On the M&A front, we continue to evaluate acquisition opportunities in the precast space, including single-plant candidates that would expand our geographic reach and capabilities. Our acquisition criteria remain disciplined, and we are actively exploring several options. Other capital priorities include paying down debt and returning value to shareholders. During the third quarter, we repurchased approximately 186,000 shares at an average price of $42.90, totaling $8 million. In summary, we remain on track to deliver a record year in 2025, and we are well-positioned for continued momentum in 2026. Looking ahead, we're expecting to see a normal fourth quarter due to seasonal factors such as two major holidays, but more importantly, severe weather-related events, which we have a lot of experience with over the last few years. In the fourth quarter, we anticipate modest year-over-year growth in both revenue and margins in our precast business, and revenue and margins for the Water Transmission Systems business to be similar to the year-ago period. Our record-setting performance throughout the year underscores the strength and resilience of our business model, the durability of our end markets, and the exceptional commitment of our employees who continue to drive consistent execution across both segments. As always, our priorities remain clear. One, maintaining a safe and rewarding workplace; two, focusing on margin over volume; three, intensifying our pursuit of strategic acquisitions; four, implementing cost efficiencies across the organization; and five, returning value to our shareholders when M&A opportunities are limited. Thank you to our entire team for your continued dedication and execution. I will now turn it over to Aaron, who will walk you through our financials in greater detail.

Thank you, Scott, and good morning, everyone. As Scott mentioned, we delivered record-setting results this quarter, achieving the highest quarterly revenue, gross profit, and earnings per share in our company's history. In particular, the Water Transmission Systems segment's performance was exceptional, benefiting from several tailwinds, including higher-than-expected volume as well as cost efficiencies realized on improved plant utilization and favorable costing against our project estimates. We believe that shifts in the competitive landscape combined with a favorable demand environment have created conditions where strong quarterly results, such as those seen in the third quarter, are occasionally achievable. However, we do not consider this level of performance to represent a new baseline for the WTS segment. I'll now turn to our third quarter profitability. Consolidated net income was $13.5 million or $1.38 per diluted share compared to $10.3 million or $1.02 per diluted share in the third quarter of 2024. This is the highest earnings per share posted in the company's history outside of the third quarter of 2018, which was elevated by a one-time $22 million noncash gain on bargain purchase associated with our acquisition of Ameron Water Group. Our results since that acquisition, including the record results achieved in the third quarter of 2025 serve as continued validation of that acquisition's positive contributions to the organization. Our third quarter consolidated net sales increased 16% to a record $151.1 million compared to $130.2 million in the year-ago quarter. Sales for the Water Transmission Systems segment increased 20.9% to a record $103.9 million compared to $85.9 million in the third quarter of 2024. The increase was driven by a 14% increase in tons produced, resulting from changes in project timing and a 6% increase in selling price per ton due to changes in product mix. Precast segment sales in the third quarter increased 6.6% to $47.2 million compared to $44.3 million a year ago. Our performance was driven by an 8% increase in selling prices due to changes in product mix, which was partially offset by a 2% decrease in volume shipped. As a reminder, the products we manufacture are unique. Shipment volumes in the case of precast and production volumes in the case of WTS and the corresponding average sales prices for both segments do not always provide comparable metrics between periods, which are highly dependent on the composition of each segment's product mix. Our third quarter consolidated gross profit increased 19% to $32.2 million or 21.3% of sales compared to $27 million or 20.8% of sales in the third quarter of 2024. Water Transmission Systems gross profit increased 33% to a record $22.1 million or 21.3% of segment sales compared to gross profit of $16.6 million or 19.4% of segment sales in the third quarter of 2024, primarily driven by higher pricing due largely to changes in product mix as well as higher production volumes and associated operational efficiency gains. Precast gross profit decreased 3.4% to $10 million or 21.3% of segment sales from $10.4 million or 23.5% of segment sales in the third quarter of 2024, primarily due to changes in product mix. Selling, general, and administrative expenses increased 13.2% to $13.1 million compared to $11.6 million in the third quarter of 2024 due to higher compensation and benefits expense. However, as a percentage of sales, SG&A improved to 8.7% from 8.9% in the prior year. For the full year 2025, we now estimate our consolidated selling, general, and administrative expenses to be approximately $52 million. Depreciation and amortization expense in the third quarter of 2025 was $4.2 million compared to $4.1 million in the year-ago quarter. For the full year, we expect depreciation and amortization expense to be approximately $19 million. Interest expense decreased to $0.8 million from $1.5 million in the third quarter of 2024 due primarily to a decrease in average daily borrowings. For the full year 2025, we expect interest expense of approximately $3 million. Our third quarter income tax expense was $4.7 million, resulting in an effective income tax rate of 26%. This compares to $3.7 million in the year-ago quarter or an effective income tax rate of 26.3%. Both quarters were primarily impacted by nondeductible permanent differences. We continue to expect our tax rate for the full year 2025 to be within the range of 24% and 26%. Next, I'll transition to our financial condition. Our strong balance sheet and ample liquidity support the execution of our capital allocation strategy. As of September 30, 2025, we had $27.6 million of outstanding borrowings on our credit facility, leaving approximately $96 million in additional borrowing capacity on our credit line. For the third quarter, net cash provided by operating activities was $21 million compared to $22.7 million in the third quarter of 2024. The modest decline was primarily due to changes in working capital, partially offset by our increased profitability. Our capital expenditures for the third quarter were $7.8 million compared to $6 million in the third quarter of 2024. For the full year 2025, we continue to expect CapEx in the range of $19 million to $22 million, including approximately $5 million for various investment projects, most notably to support precast product spread as well as initiatives to grow both our Park and Geneva businesses to $100 million top line in the near term. Accordingly, we generated positive third quarter free cash flow of $13.2 million compared to $16.7 million in the year-ago quarter. For the full year 2025, we now anticipate free cash flow to range between $32 million and $37 million, up from our prior outlook. Consistent strong cash generation remains a top priority for our leadership team, which is focused on driving growth, both organically and through prospective M&A as appropriately valued opportunities arise. We remain committed to enhancing shareholder returns. Consistent with our capital allocation strategy, including repurchasing shares. In the third quarter, we repurchased 186,000 shares for an average price of $42.90 per share. To close, we are proud of our strong performance and sustained momentum this quarter, resulting in another period of record-setting results. We remain focused on driving long-term growth and positioning the company for sustained success through the remainder of 2025 and beyond. We want to thank our employees for their strong execution and for their commitment to safety, which remains the foundational value central to our culture. We also appreciate the continued confidence and support of our shareholders as we execute our long-term strategy. I'll now turn it over to the operator to begin the question-and-answer session.

The first question comes from Julio Romero with Sidoti & Company.

I wanted to start on the Water Transmission Systems segment. Really impressive to see a two-handle in front of the segment margin there, obviously, strong execution in the quarter by you and your team. One item you called out was stronger-than-anticipated customer shipping requirements in the quarter. I was hoping you could dive into that a little bit and expand on that and how much of a driver that in particular was in the quarter?

Yes, I think that was a really big driver of the quarter, Julio. The production levels were strong in the quarter, so we had good absorption levels in the quarter, and we had increased fabrication work. But the level of shipments that we saw throughout the quarter was pretty significant because just to give you an example, at our Adelanto, California plant, we shipped 421 loads in September alone. And then in Saginaw, our plant in Saginaw, we shipped 272 loads alone. So it was really interesting because when the numbers came out and it was actually over $100 million at first blush, you start to look at, "Oh man. Maybe it's getting caught up in current assets." But if you look at what's happened to our current assets, really since last year at this time, our accounts receivable was up like almost $20 million versus where it was in the second quarter and about $19 million from where it was in the third quarter of '24, which means stuff is being shipped built to the customer. And I think even more importantly, the contract assets, which is when we produce and recognize revenue on something before it's shipped, those numbers versus the second quarter were down $6 million and versus the third quarter of '24, they were down $24 million. So all that stuff moved in the right way, which shows production was good; really, the shipments outpaced what the production level was in the quarter, which was really a driver for it. So it increased the revenue and increased freight revenue that we got, and the absorption numbers were fantastic. So that's really the story of the quarter for Water Transmission.

Very helpful there. And you mentioned you expect backlog levels will remain above $300 million through year-end, and that implies pretty significant order acceleration here in the fourth quarter. Can you maybe talk about the drivers of that implied order acceleration? And secondly, what kind of margin profile is anticipated for those orders?

Yes. What I would tell you is, right now, looking at the bidding schedule, we have somewhere in the area of about $200 million worth of work bidding in the fourth quarter. And just to give you a little bit of a perspective on that, we have in the schedule right now, and this is on a tonnage perspective, 60,000 tons worth of projects that are scheduled to bid in the next six weeks. So those are projects like Red River, IPL, there's a reliner project in California. There's projects from Oklahoma City that are scheduled to bid in the next six weeks. So it's a very, very strong bidding quarter. And what you'll really see, Julio, is those bids and those jobs, once those are put into the backlog, should keep the backlog above $300 million and likely improve it as we go through the end of the quarter. Those projects will be done in 2026. So really, what it's doing is setting us up for a very strong entry into 2026 with those things bidding.

Yes, that's fascinating. I mean Red River is something you've talked about for a long time now for several years, if I'm not mistaken. So to see that bidding in the fourth, is that correct or?

Yes. Each state has some variations, but there is spending that needs to occur. There are actually three significant segments of Red River bidding during that timeframe in the fourth quarter. I’m not sure if they all fall within the six-week timeframe, but they are all scheduled to bid in the fourth quarter. Additionally, there is a segment of IPL set to bid in the fourth quarter, which we discussed ten years ago, as part of the program's extension. Therefore, the fourth quarter is likely to be quite an interesting bidding period for us. As mentioned in the script, it should notably contribute to enhancing our backlog as we progress through the quarter.

The next question comes from Ted Jackson with Northland Securities.

All I can say is, what an amazing quarter. I'm looking into water transmission or SPP. You've seen tonnage increase by 14%, and it was a fantastic quarter for that segment. Can you discuss the utilization rates across your facilities and where you stand with that? The fact that you achieved this in the right environment suggests it could be replicated. I'm curious about the metrics you've gathered.

Yes. I think that as we move forward, these types of quarters are becoming more achievable. It's not a new standard, but when we examine a strong quarterly revenue rate for water transmission, it typically falls between $80 million and $90 million, likely around $82 million to $85 million. Such outcomes are possible. In the third quarter, our facilities experienced utilization in the high 60s to about 70%. We faced instances where customer demand necessitated some second shift work since our water transmission plants usually operate on a single shift. Based on my observations over the last few days, I would estimate utilization in the high 60s to low 70s. Moreover, we have significant capacity to increase output, and if demand continues, we can expand staffing and production since we are currently operating primarily on one shift at each plant.

With a 14% increase in tonnage, there are clearly strong bookings worldwide. The competitors in the market aren't forcing you to reduce prices for volume. Is there a chance for you to achieve better margins, excluding this quarter, compared to historical levels given the current macro environment? How is the competition for your facilities these days? How does it compare to previous periods?

I believe the competitive landscape is fairly stable. When examining backlogs across the industry, it seems that most are seeing a slight increase, which typically supports improved margins going forward. Currently, we are in a favorable market, not exceptionally strong, but solid. The competitive dynamics align well with the market size. Bids remain competitive, so we need to focus on reducing costs in our plants through lean manufacturing and setting specific metrics. Overall, the environment is positive, although some bids in the fourth quarter are expected to be highly competitive. Demand is currently around 140,000 to 145,000 tonnes, and it may rise slightly in the fourth quarter, which would make for a decent quarter. If annual demand exceeds 200,000 tons, we could start to see margins that are better than historical levels. Regarding the Infrastructure Investment and Jobs Act, there was an expectation for a significant boost in the water transmission systems market, but funding is being disbursed quite slowly. Of the $50 billion allocated, only about $20 million has been committed so far, with roughly half of the total funds still unallocated. Thus, rather than experiencing a drastic surge in the market, we might witness a gradual increase over time. This outlook is preferable for the business because significant spikes often lead to drops afterward. A stable marketplace through 2026, 2027, and 2028 should support stronger margins and enhance performance linked to our cost-reduction efforts in the plants.

Okay. I got two more topics, and I'll get out of line, too. Just quickly over on to the precast side of the house. I mean, a nice revenue number. I was a little surprised on the margin given that my understanding has been that if the Park business is turning around, then that's typically been a better margin set of products for you all. I mean, so maybe you could just unpack that a little bit for me. Is that just because you had some underutilization at Geneva, or is my memory on that incorrect? Just kind of curious as to on the market side?

Yes. No, I think you're right; I think the Geneva business is still very strong. It's very strong. But we're now up and fully running the Exact 2500, which is the RCP Manhole machine. So we've got increased depreciation that started associated with that in the building. So that's had a little bit of an impact on the margin at the Geneva business in the quarter. We expect, as we get the Exact 2500 up to the production levels that we want, that we'll be adding a second shift to that, that we're working on, which will further enhance the market or the margins. And the old transmatic that we have at Geneva, we'll be able to shut that down and not have to be running that. So that will reduce cost and enhance the margins. So we expect the Geneva margins to start coming back up in the fourth quarter to a more normalized rate. On the Parks side, what I would tell you is the Park margins now are up probably a few hundred basis points from where they were from the beginning of the year. So that is definitely traveling in the right direction and really being driven by, I think, owners and developers are taking into account that the interest rate is going to fall over a period of time. So they're pushing projects into planning and design right now, which is going to continue to build that business over the next 12 months to 18 months. So we think we'll start to see the Park margins probably start to normalize in the next couple of quarters. But the Park margins have really come up by about 300 or maybe even a little bit more than 300 basis points since the beginning of the year. It's really the Geneva fall off with the increased depreciation, the double running of the equipment in the quarter until we get it shut down, and then getting the Exact 2500 up and getting it onto a second shift that impacted the third quarter for Geneva, and we see that coming back in the fourth quarter and the margin starting to return to normal. So it's just a timing thing, Ted.

Okay. My last question relates to the guidance that Aaron provided, indicating that fourth quarter SG&A would be around $13 million. Considering the $52 million target for the year, how should we approach that expense? While I understand you're not discussing 2026, should we expect a similar run rate for 2026, around $52 million or $53 million, especially in light of how those expenses have increased over the last fiscal year?

We typically consider our SG&A expenses with a standard inflation adjustment when we begin our budgeting process. Additionally, we are committed to reviewing our costs, particularly in our support and sales centers, to enhance value creation. We're examining areas for potential zero-based budgeting to identify where we might reduce expenses. This presents us with opportunities to make modest cuts from an inflation-adjusted starting point. However, any significant changes like mergers and acquisitions could alter this outlook. Another factor we've faced this year is the bonus expense, which is tied to our profitability and can vary significantly.

Yes, that's not a bad expense.

And that's what does have us elevated this quarter, particularly on what I expect to be something that elevates us in the fourth quarter as well.

Just a little bit of an add-on to that. When you think about SG&A expense, my view when we look at that is that our operating margin should be 10% or above. And we're not quite there yet. So we've got some pretty hard looks going, like Aaron said, on SG&A. We've implemented some zero-based budgeting this year to really kind of hone in on that because the idea is to get those operating margins above 10% on an annual basis, not just for a quarterly basis, but to have that sustained 10% or better for the year.

The next question comes from Jean Veliz with D.A. Davidson.

Can you discuss your ability to increase pricing for precast now that some of the cost inputs are starting to decrease? And as a follow-up, please continue.

No. Let me answer the first part because I might forget the second part. Yes, we've successfully increased prices on both sides of the precast business recently at Park, driven by improvements in the nonresidential sector. This is reflected in our revenue and the volumes we're experiencing, supported by the Dodge Momentum Index. Everything is trending positively. On the Geneva side, the business remains strong, having had a record year last year and likely heading toward another record this year, with price increases being implemented successfully. Additionally, material costs such as cement, small rock, large rock, aggregate, and sand are stabilizing compared to the past couple of years. What was the second part? Sorry for interrupting.

No problem. Thanks for giving us that color. Yes. So just given what you said, I was wondering what kind of volume posting your expectations versus pricing?

Yes. I think you'll see a growing volume in the Park side of the business. And that's simply related to the nonresidential piece. I also think you'll see a volume in the Geneva business that is continuing to inch its way up, and we're starting to do a little bit more nonresidential work at the Geneva plant site. So that will improve the volume in the next few quarters. And really, I think that by the time we start getting into mid-next year beyond that, the Geneva facility is probably going to be on close to a $100 million annualized rate, and Park will be a little bit behind that, but running toward that probably maybe more toward the first quarter of 2027. But both of those businesses are expected to improve throughout '26 based on the numbers that we're looking at preliminarily in the plan.

Between volume and pricing, what has been a better driver over the next 12 months?

I think probably the volume and the absorption, the higher levels of absorption and the volume will be a little bit more of an impact on what the pricing is.

And just one last one for me in the water transmission. Can you just talk about a little bit more going into next year about your backlog, specifically, just trying to understand more about the sustainability? Or how should we think about what the high watermark is starting in Q1 and through the next year?

Regarding backlog, yes. The backlog will depend on the bidding activity we have in the fourth quarter, and we anticipate securing some wins in that bidding, leading to an increase in backlog by year-end. We expect to have a strong backlog as we enter the first quarter of 2026. For the Water Transmission Systems business, good revenue figures typically fall between $80 million and $90 million. At the start of the year, revenues may be closer to the low 80s in the first quarter due to seasonal impacts. As we progress through the second and third quarters, similar to previous years, we expect revenue to rise to around $85 million to nearly $90 million. By the fourth quarter, revenues might decline to the mid to low 80s. This gives a normalized view of revenue for the water transmission sector currently. However, there is potential for exceptional performance in certain quarters. Looking back at previous years, the last third quarter was a record until this year's second quarter, which then set a new record, driven by both water transmission and precast. Generally, the second and third quarters are the strongest periods for both business segments.

We have a follow-up from Julio Romero with Sidoti.

Thanks for taking a couple of follow-ups. My first question is about Texas Proposition 4, which is on the ballot next week. It allocates $20 billion for water infrastructure over the next 20 years using designated state taxes. Would your company benefit from this, and if so, which parts of your portfolio would see advantages?

It's definitely on for water infrastructure, specifically the water transmission systems. Regarding Texas, I would say they are not relying on IIJA funding. Instead, they are generating their own funding. The Texas SWIFT program has been around for about 10 to 12 years, and they are now advancing Proposition 4. This will undoubtedly provide funding for projects related to water transmission systems. I believe the legislation in Texas has already set aside approximately $2.5 billion to contribute to the Texas Water Development funding to begin financing some of these projects, even before the upcoming vote in November by the citizens. Thus, we will see benefits on the water transmission side from these funding channels in Texas, just as we have for the past 15 to 20 years through the SWIFT program, which has supported various projects like Lake Texoma and IPL. This is also a key reason why Texas remains one of the largest markets for water transmission systems. So overall, it looks promising.

Very helpful there. And then earlier, you touched on the cash flow benefit from water transmission systems in the quarter. Can you maybe just talk about the sustainability of those cash flow dynamics going into '26 and beyond?

Yes, I believe we are adopting a new approach to the business. The team on the water transmission side has excelled in generating cash. In the past, the water transmission systems business tied up significant cash in current assets. However, we have shifted our focus by linking part of the senior level variable compensation to cash flow, emphasizing progress payments for ongoing projects and receiving payments for steel upfront. We believe this approach will ensure sustainability as we move forward. Our aim is to align our cash flow with our earnings per share, which is a solid benchmark. The water transmission systems business has effectively become a cash flow generator, significantly contributing to our company’s growth strategy. We're now seeing material on hand, prepayments, and progress payments in this sector—practices that were not common five years ago.

Julio, for your understanding, the cash cycle for the water transmission site has typically been higher during our busy quarters, especially in Q2 and Q3, due to the focus on delivering the job rather than managing working capital. However, over the past year, we've performed exceptionally well without experiencing any spikes. In fact, the opposite has occurred. We began with a strong level of working capital days for the WTS segment, just under 190, and that number has now decreased to about 165 days. Regarding sustainability, I believe it stems from a mindset shift that Scott has emphasized, which has become ingrained in our operations and is something we frequently discuss and is likely sustainable. I'm pleased to report this change, especially since two or three years ago, it was quite a challenge for me.

At this time, I would like to turn the call back over to Mr. Scott Montross for closing comments.

Yes. Again, I'd like to thank everybody for joining us today, and we're pretty pleased with the operational execution that we've had in what we consider to be a fairly dynamic environment in 2025. I think really affirms the strategic choices we've made over the last several years and starts to highlight the strength and the resilience of our evolving business model. And I think we just talked about a little bit with Julio. The execution continues to drive growth and free cash flow, particularly in the water transmission systems business, which for many years tied up a bunch of cash. And like I just said, it's the water transmission systems business has really become a cash flow generating machine. As we look ahead, as we talked about, the bidding activity for water transmission is really strong for the rest of 2026. We think we're going to have very strong backlog momentum building and positioning for positioning to us to go into 2026 very strong. In the precast business, the nonresidential side is continuing to gain traction, and the Geneva on the residential side remains strong. In closing, we're still committed to, number one, workforce safety, that's the #1 thing that we do, margin expansion, and executing our strategic growth initiatives to create long-term value for our shareholders. I'd just like to thank everybody again for your time and continued support, and we look forward to speaking with you again on the fourth quarter call in the February time frame. So thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.