NWPX Infrastructure, Inc. (NWPX) Q2 2020 Earnings Report, Transcript and Summary

Good morning and welcome to the Northwest Pipe Company's Second Quarter 2020 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to Scott Montross, President and CEO of the company. Please go ahead.

Good morning and welcome to Northwest Pipe Company's second quarter 2020 earnings conference call. My name is Scott Montross, and I'm 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, August 4, 2020 at approximately 4 P.M. Eastern Time. This call is being webcast, and it is available for a 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 year-ended December 31, 2019 and in our SEC filing 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 for joining our call today to discuss our results. I'll begin with a review of our second quarter 2020 performance. Bidding activity has remained strong, which has resulted in an improved second quarter backlog versus first quarter and a strong precast order book. As of June 30th, our backlog including confirmed orders for the Northwest Pipe Legacy business, was 246 million compared to 224 million at the end of the first quarter of 2020 and 276 million at the end of the second quarter of 2019. The current 246 million represents our eighth consecutive quarter of up 200 million and remains very high by historic standards. In addition, our order book for the concrete Pipe and Precast business remains elevated as we progress through the busy time of the year. Second quarter net sales of 70 million benefited from 12.4 million contribution from our acquisition of Geneva Pipe and Precast assets in the late January. Improved legacy pricing and positive contributions from Geneva helped drive a 57.7% year-over-year increase in our gross profit dollars to 13 million. Legacy business in the second quarter of 2020 was negatively impacted by shifts in job timing as well as the shutdown of our SLRC Mexico facility. Strong performance by Geneva Precast business helped elevate revenue and gross profit in the quarter that saw the legacy business more affected by COVID-19-related factors. The ability to offset temporary periods of choppiness in the legacy steel pressure pipe business is the very reason why we chose to enter the precast concrete water space as part of our growth strategy, a business that is significantly more transactional in nature. Backlog after declining at the end of the first quarter of 2020 grew through the end of the second quarter as the bidding schedule remained strong. The structure of our business remains very solid as we move into the second half of 2020. As we anticipated, our revenue and gross profit were negatively impacted by the government-mandated shutdown of our water infrastructure manufacturing facility in San Lui Rio Colorado, Mexico, or SLRC for short in the early April time frame due to COVID-19 related shelter in place orders. Thankfully, we were able to shift some of the jobs from SLRC over to our U.S. plants given that we have more than enough capacity at those facilities, which helped partially offset some of the volume decline. While the SLRC facility remained idle for the majority of the second quarter, we were authorized to resume partial operations at 30% staffing on June 1st, and have since been able to steadily ramp up our operations back to pre-COVID-19 production levels as of July 31st. We are very pleased to be able to bring all of our affected employees back to work as safely as possible. While COVID-19 impacted the timing of some bidding activity and delayed some jobs, we have not experienced any major business interruptions at our plants in the U.S. due to the essential nature of our operations and producing critical water infrastructure products. In addition to the designation as an essential business, we believe we've been able to successfully navigate through this challenging and complex environment due to the proactive measures we took in March to help protect the health, safety, and well-being of our employees. This remains our number one priority. In addition to improving sanitary measures throughout our facilities, we have continued to promote social distancing, encourage working from home when possible, or otherwise maintain staggered shift schedules and continue to offer additional hours of paid sick leave to help support those employees impacted by COVID-19. I'd now like to turn to a discussion of our two-pronged growth strategy, which remains a key area of focus. First and foremost we are maximizing our core steel pressure pipe water transmission business through ongoing cost reductions and lean manufacturing as well as pursuing limited but known growth opportunities. As many of you are aware, given we currently have 50% of the market share in steel pressure pipe market, expansion and acquisition opportunities are fairly limited in this space. As such, the second component of our growth strategy is to grow in an adjacent water space. As demonstrated by our recent acquisition of the Geneva Pipe and Precast on January 31, 2020, we chose the precast concrete space which we estimate is roughly a $3.5 billion to $4 billion market in the U.S. We would characterize this market as having strong growth prospects with higher product margin opportunities and a quicker cash conversion cycle relative to our legacy business. Demand in the precast concrete space has held up well in this environment as demonstrated by our strong precast revenue order book. Despite the challenges the current environment presents from a broader macroeconomic perspective, we are continuing to evaluate various potential M&A opportunities, but we remain highly disciplined in our approach. Our criteria is centered on organic growth potential, strong margin characteristics, solid asset efficiency, and a positive cash flow profile. Since working through the 100-day integration plan for Geneva, we've made significant progress in creating cost efficiencies, lean manufacturing, and inventory management. From a product perspective at Geneva, we see strong potential for future organic growth opportunities through our expanded addressable market. We're also in the process of commercializing new innovative concrete products for use in corrosive sewer applications in the second half of this year and look forward to sharing them with you in the following weeks and months ahead. I will now turn to a look at current and upcoming Water Transmission projects. In the Texas market, the SWIFT program has funded over 8 billion in projects over the last six years. SWIFT is expected to continue funding major regional programs like the continuation of the Surface Water Supply program in Houston metropolitan area to ensure sustainable long-term water supplies for Texas. The ongoing multiyear multiagency Houston Surface Water program is expected to bid multiple segments in 2020, representing 32,000 tons of pipe for West and North Harris County regional water authorities. We anticipate both authorities having additional bids in 2021, representing 33,000 tons of pipe. The next new reservoir to be built in Texas is the Lake Ralph Hall for the Upper Trinity Regional Water District. This is another major program currently in design that includes a new dam and pipeline to move water into the Dallas-Fort Worth region. The project represents 17,000 tons of pipe. Construction procurement is expected to begin in spring of 2021. The Alliance Regional Water Authority program in Central Texas is another multiagency regional water program. The program includes a large pipeline, pump stations, and treatment facilities and represents 15,000 tons of pipe. Construction is expected to begin in 2021. In the western market, California's Prop 1 $7.5 billion bond for water infrastructure has created the much-needed funding for projects within the state. According to the California Natural Resources Agency, 95% of the funds have been appropriated for various projects as of the 2020-2021 fiscal year. We expect requirements for these projects to stretch out over the next several years. Water reuse programs have generated new opportunities in the California market on which we expect to see bidding activity continue for the next year. The MWD is heading up a regional reuse pilot project in conjunction with LA Sanitation District. This reuse program will treat and recycle water from one of the largest reclamation facilities in Southern California and involves 60-plus miles of large diameter pipe. The current demonstration facility has been operating for six months in construction of the full-scale treatment and conveyance facilities could begin as early as 2025. The PCCP rehabilitation programs will result in about 10,000 tons annually over the next two to three years. Currently, some of the owners undertaking rehabilitation programs have slowed their schedules. These are not cancellation of projects but simply work shifting to later this year. The City of Phoenix has begun procurement and construction activities on their zones 3D and 4A improvement program. This program safeguards the city's water supply against curtailments in Colorado River water allocations. The projects identified represent over 8,000 tons of new pipelines, pump stations, and treatment facilities. 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 pipe. The project is forecast to begin in 2024-2025. Southern Nevada Water Authority has begun moving forward in earnest with an 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 17 [ph] inch steel pipe with construction tentatively scheduled for 2024. In North Dakota, progress has slowed on the 140 mile, 87,000 ton Red River Valley Water Supply Project. A 2 mile demonstration project has been forecasted to bid in the third quarter of 2020, with the bulk of the project being dependent upon a 2021 legislative session to commit to full funding plans. In Colorado, we are tracking a late 2020 final record of decision by the U.S. Army Corps of Engineers for the Northern Integrated Supply project. If favorable, construction of up to 150 miles of pipeline is expected to start in 2023. The project is located 60 miles north of Denver in the Fort Collins area. We continue to believe our business is very well positioned to operate through the pandemic due to the essential nature of our operations to provide critical water infrastructure systems in the U.S. Our backlog, which remains very high by historic standards in the bidding activity for 2020 is projected to remain strong. Further, we have a strong balance sheet and ample liquidity position to execute our strategic growth priorities. Over the last two years alone, we've completed over $88 million worth of acquisitions, primarily funded by our balance sheet and have continued to generate positive cash flow. In addition, while we are cautiously optimistic our backlog will continue to grow, the variable nature of our cost structure provides us with the flexibility to be in a position to quickly react to changing market conditions should we need to do so in the future. Before I conclude, I'd like to also welcome Amanda Kulesa, who was elected to our Board of Directors as an independent director on July 9th. Amanda's experience in organizational development and working with Global 500 organizations to help maximize leadership effectiveness and value creation will be essential as we continue on our path of growing the company. In summary, while the challenges the pandemic has created for the broader economy in our business might have caused a few issues in the short run, our bidding volume has only continued to improve. Accordingly, we continue to estimate a current market size of roughly 209,000 tons and a job count of 240 for fiscal 2020 versus 242 in fiscal 2019. As we move forward, we will remain focused on; one, taking every precaution to keep our employees safe during the COVID-19 pandemic; two, the ongoing integration of the Geneva assets; three, a persistent focus on margin over volume; four, continuing to implement cost reductions and efficiencies at all levels of the company; and lastly five, identifying strategic opportunities to grow the company. I will now turn the call over to Aaron, who will walk through our second quarter financial results in greater detail.

Thank you, Scott and good morning, everyone. I hope you are all staying safe and healthy. Now let's discuss our financial results. Adjusted net income for the second quarter of 2020 was $4.4 million or $0.45 per diluted share compared to adjusted net income of $5.4 million or $0.55 per diluted share for the second quarter of 2019. Adjusted net income excludes unique and unusual items and is provided for comparability purposes. The most significant adjustment was $2.7 million in recoveries on the now-closed insurance claim associated with the fire at our Saginaw facility in April 2019. This was partially offset by $0.5 million in amortization of the intangible assets acquired with Geneva and $0.5 million in estimated tax expense for these items. Our second quarter of 2019 results included $3.2 million in incremental production costs as a result of the fire as well as the associated estimated tax impact of those charges. Please refer to the reconciliation of non-GAAP financial measures in our earnings release for a full accounting of the aforementioned items. Our second quarter sales increased 1.1% to 70 million compared to 69.2 million in the second quarter of 2019 due to a 12.4 million contribution from Geneva Pipe and Precast. Legacy revenues declined from the year ago quarter due to a 31% decrease in tons produced, primarily related to short-term project delays and the shutdown of our SLRC Water Infrastructure Manufacturing Facility in Mexico, which was partially offset by 20% increase in selling price per ton. Gross profit increased 57.7% to 13 million or 18.5% of sales compared to 8.2 million or 11.9% of sales in the second quarter of 2019. Both quarters margins were impacted by timing differences caused by the Saginaw fire. The second quarter of 2020 was elevated by 1.8 million in recoveries associated with the business interruption portion of that insurance claim. While the second quarter of 2019 was reduced by 3.2 million of incremental production costs associated with redeploying projects affected by the fire. In addition, the second quarter of 2020 included $0.3 million of amortization expense associated with Geneva. When adjusting for these items, gross profit as a percentage of sales would have been 16.4% for the second quarter of 2020 compared to 16.7% for the year ago quarter. The addition of Geneva helped offset some of the second quarter headwinds created by the closure of our SLRC facility. As Scott mentioned, restrictions at that plant have been lifted, and we are now operating SLRC at normal production levels. Selling, general and administrative expenses were $5.6 million in the second quarter of 2020 compared to 4.7 million in the second quarter of 2019. The increase was primarily due to higher professional fees, amortization and compensation expenses due to the addition of Geneva. We continue to expect quarterly SG&A expenses to be between 5 million and 5.5 million for the balance of the year. We had an income tax rate of 26.7% in the second quarter of 2020, compared to an unusually low-income tax rate of 13.1% in the second quarter of 2019, which was impacted by estimated changes in our valuation allowance. For the full year of 2020 we continue to expect our income tax rate to be approximately 27%. Now turning to our balance sheet and cash flow. Total available liquidity at June 30th was approximately 74 million, which comprised over 19 million in cash and cash equivalents and 55 million from our line of credit. Total debt at June 30th was 15.4 million. At recent profitability levels, we have continued to easily comply with our debt covenants and expect to remain in compliance for the remainder of the year. Our balance sheet remains strong, and we have not experienced any adverse impacts from the broader economic downturn affecting collections of our accounts receivables. We generated strong cash flows from operations of 13.8 million during the second quarter of 2020 compared to 6.9 million in the second quarter of 2019. Depreciation and amortization totaled 3.8 million for the quarter. While depreciation varies with quarterly production levels, we expect amortization to be approximately $0.6 million per quarter for the balance of the year. Capital expenditures totaled 3.6 million for the quarter, which were primarily used for ongoing maintenance CAPEX. For the remainder of 2020, we expect our capital expenditures to be in the range of 12 million to 14 million. In summary, in spite of short-term setbacks we encountered with the shutdown of our SLRC facility, we achieved solid second quarter financial results due to a strong operational leadership and plant level execution in a highly complex environment. We are very pleased to have all our facilities back up and running. Thank you to all of our employees for their ongoing dedication through these unprecedented times and for making Northwest Pipe Company a safe place to work. Now I'll turn it over to the operator to begin the question-and-answer session.

[Operator Instructions]. The first question today comes from Brent Thielman of D.A. Davidson. Please go ahead.

Hey, thank you. Good morning.

Good morning Brent.

You guys generated really nice cash flow this quarter, frankly, through the first half. I didn't see all the details of that. I'm just wondering what's been driven by sort of any sort of working capital windfall from the legacy business that you might have to invest back later versus contributions from Geneva?

Well I guess, I would start on it by saying that as we've talked in the previous calls, Brent we've been pretty focused on collections and AR in the marketplace right now. And our percent current AR is probably more than doubled over the last year and half, which is a big driver when the business is this large. As we start moving forward and we see this cash continue to collect on the balance sheet and as we sit here now, it's actually even higher than what we ended the second quarter with we expect based on the bidding activity and the backlog business to be higher, specifically in the legacy business in the second half of the year. So certainly we would expect some of that additional cash to be pulled into working capital at that point into the current assets. But the way it looks right now, our cash generation should continue as we go forward. It will probably fluctuate based on the size of the legacy business, but I think we are doing a pretty good job of collecting cash and I'll let Aaron talk a little bit about the cash as a result of getting some of the cashback on the Saginaw fire.

Yes. And that actually is going to be a Q3 event. It's good to be clear about that. We did book the amounts for the second or prior to the second quarter, but those aren't affecting cash flows yet. Really, it's been the working capital in addition to the profitability and adjustment for some of those noncash items. We've just had a pretty good start to the first half of this year and we're doing our best to keep things growing. But like Scott said, I haven't seen a fall-off on anything on the AR front and things are kind of humming along right now.

And Aaron, can you remind me that the cash you expect from the Saginaw fire and I guess in 3Q?

Yes, it's about $2.8 million, about $1 million of it will record -- down in the investment section or investing section and the rest will be up in operations. That follows kind of the line of cost of sales versus below the line accounting for this settlement?

Okay, great. And then you guys saw, I mean, a really strong lift in pricing, at least year-on-year this quarter, 20%. How much of that, as you look at that, how much of that is determined by mix, project mix versus steel versus stronger bid margins and maybe more rational competitive behavior? Just trying to parse that out.

Well, I think some of it is steel. Obviously, we've seen steel moderate down now for a period of time. And it appears to be based -- being significantly affected by COVID in the present term. But I think the pricing in most regions has held up pretty well, which ultimately helps positively impact those margins. I think the bidding environment, for the most part, is relatively solid with the competitive landscape. So I think we're in a situation where as we go forward, with the amount of work that we see bidding, not only in the second half of this year but as we look at our three-year plan, 2021, 2022 and 2023, I think it bodes well for even further price raising and increases and further impact on the margin, not only from the perspective of moving price up but the higher levels of production and higher absorption within the plants contributing to the margins too. So I think we're on a good track with what's going on in the marketplace. For a little while, Brent, when the COVID crisis hit, we saw a little bit of panic bidding by a couple of our competitors. That's seeming to subside a little bit based on the amount of jobs that are actually coming at us. So we feel pretty good about pricing levels and a positive impact on margin as we move out for the next several quarters

Okay. That's great. Maybe one more, and I'll pass it on. In Geneva, it seems like housing and kind of nonresidential backdrop at least in those mountain states it's held up really well. And I know you don't have as much of a hard dollar backlog visibility there but can you just talk about, Scott, what those business leaders see for the rest of the year and perhaps even into 2021?

Yes. We've seen, based on, like you said, the housing market in that region, the economic environment not only in Utah but some of the surrounding states like Idaho and Nevada, certainly the housing market has held up better there. Obviously, in total, in the United States we saw a little bit of a dip in housing starts after the January, February time frame, but it seems like it's starting to recover a little bit as we're going into the June time frame. So the feeling is for the Geneva business that we're on a pretty good track for what we thought that business was going to look like when we acquired and when we had the discussion back in January that looks pretty solid. We're currently working on those innovative products that help us stop the corrosion factor on concrete and sanitary sewer applications that we think is going to provide really good organic growth. So I think all those factors in that region point to good rest of 2020. And actually, as we go into 2021 we feel that the innovative products were actually going to add to that organic growth and continue to push both the top line and margins up.

Okay, thank you for all the color. I appreciate it. I will get back in queue.

Thanks.

Your next question comes from Gus Richard of Northland. Please go ahead.

Yes, thanks for taking the question. Just real quickly, you had some delays in Q2, have those projects restarted and what is the environment for your end customers in terms of getting stuff done?

Well yes, we have seen some of them restart. Some of these delays are relatively short, Gus. Part of the issue is it's the same as we see going on across really business environment across the U.S. We've got a lot of people working from home at this point. It's even as far as customers, utilities. And what happens is you get a situation where it slows down, getting the permitting done and things like that. So I think people are getting a little bit more used to working at home and having to go through the process. So it's getting a little bit easier with getting those things done. But the reality is we'll probably continue to see things push around for a period of time. But it looks like it's starting to stabilize and not getting better. So with the amount of work that, like I said before, we see coming at us I think those delays probably get less noticeable as we progress through this year into 2021.

Okay. And just as a follow-up, the funding for problem projects you're working on, that's all solid and don't see any disruption there either?

Yes, we started looking at our three year plan, Gus a few weeks ago, 2021 and -- 2021, 2022 and 2023. And what we found is a significant amount of demand out there over that time frame and what we're seeing right now is their funding mechanisms in place on those probably 75% to 80% of those projects already. So we are seeing funding continue to stay stable and have not seen any issues related to having jobs funding and having jobs get pulled out.

Got it. And then just one housekeeping question for me, what was Geneva's contribution in Q1?

What I would tell you about Geneva is that if you look at the margin profile we've seen most recently in the legacy business we're seeing a range right now of somewhere between 15% and 21% over the last several quarters, depending on delays and things of that nature. And Geneva is toward the high side of that range as we sit right now. And I think it's -- we've talked about it. We see revenue in the second quarter of somewhere in there of about $12.3 million or $12.4 million. I think that probably gives you a really pretty good idea.

Yes, absolutely. And just to follow-up, the revenue contribution in Q1, how much was it, was it only a partial quarter?

Yes. It was a partial quarter, I want to say it was around $8.3 million.

Got it, thank you.

Sure, thanks Gus.

Next question comes from David Wright of Henry Investment Trust. Please go ahead.

Hey Scott and Aaron, good morning. Hey Scott, at the end of your prepared remarks you gave a commentary on tons and jobs, can you -- can I trouble you to repeat those numbers?

Yes. For 2020, we are looking at a total of about 209,000 tons and about 240 jobs. In 2019, we saw about 242 jobs.

And how many tons?

Oh, I want to say it was probably in the area of about 219,000 or 220,000.

Okay. The -- in Geneva where you talk about strong precast order book, can you break that down into actual product areas, like just what was in demand or characterize it in some way?

Yes, the biggest product demand that we see at Geneva is reinforced concrete pipe and manhole applications. Manhole applications, including the manhole basin riser up to the street, really represent a pretty substantial amount of the business that we're doing at Geneva right now. There's a lot of smaller products like cohort [ph] and things like that, that add to the total, but a big piece of our businesses is RCP and manhole.

Okay, thanks. And then lastly, just in the press release you talk about the backlog and with the bidding -- the progress of bidding opportunities, was there any delay as a result of COVID, was it harder to get bids submitted or were less bids requested, etcetera?

I think that there's some delay in the bidding as a result of COVID. And I think it's similar to what we talked about a little bit earlier. It's the fact that we have a good deal of -- a good amount of people in this business working remotely. And a lot of times, it will slow down the permitting process and ultimately getting the job to where it's shovel ready. And that's really what we're seeing in delays. We're really not seeing anything with people saying, well, there's COVID going on, and we're just going to push this job way out into 2022. We haven't seen that. We've seen that these jobs have funding in place and momentum behind them. And the jobs that we see now going through here, we expect this momentum even with the COVID situation to carry out the next 18 months to three years. And that doesn't even include any kind of a bump up in the business that we would see with an infrastructure package, which looks like it's starting to get more legs under it, especially related to the Army Corps of Engineer projects in reservoirs and things like that. So we see a pretty significant amount of work coming for the next few years.

Well, that’s great. A very good quarter. Thanks so much.

Thank you.

The next question is a follow-up from Brent Thielman of D.A. Davidson. Please go ahead.

Hey guys, thanks for taking my follow-up. Scott, to try and put kind of a commentary around 2021 and 2022 in sort of context if you sat here a year ago in August, would you feel like you had that similar level of visibility looking out this year? I'm just trying to kind of think about how the next couple of years look for you based on what you can see today relative to maybe some points in time in the past?

Yes. I don't think it's any less visibility. I think that the COVID thing -- COVID virus, COVID-19 makes it a little bit more variable in nature, not meaning that jobs are going to get canceled, but meaning that they can actually move around. So what we're seeing as we've looked at this next three year plan is pretty large levels of demand in some of the traditional markets that we've seen large levels of demand in. And then some growing demand in some of the other markets. And it's -- certainly, as we look at it we try to throttle back our enthusiasm for the amount of work that we see coming at us that we've all been talking about for a number of years. But the demand across multiple regions looks to be substantial in the 2021, 2022 and 2023 time period. The central region, the northeast region, the western region all seem to have substantial demand as we go forward.

Got it. And then on SLRC, understanding there's some cost advantages to that facility. Can you kind of quantify or at least qualitatively talk about the profitability profile of that asset, maybe relative to the rest of the legacy platform?

Yes, it's as good as the rest of the legacy platform is profitability-wise. In some cases, it's a little bit better. Some of the -- one of the advantages of SLRC, Brent, that I think you and I have talked about before is the ability to really work on some of the -- some of the smaller diameter projects that before we had SLRC, we wouldn't have had really a good shot at. So I think that adds a big piece to it. So we've actually seen some quarters where SLRC margins are significantly higher than what we see in some of our legacy business. But it fluctuates around based on the mix and what we see in the products.

Okay, great, thank you for taking the follow-up.

No problem.

Next question comes from Tom Spiro of Spiro Capital. Please go ahead.

Tom Spiro, Spiro Capital. Good morning.

Good morning Tom, how are you?

I am well, I am well. Thank you, hope you are too. Just one question with the -- Scott, with the weakness in the oil patch, oil and gas price is so low, do you see any effort by some of the energy pipe guys to try to get into your business or do you anticipate that?

We haven't seen any of that since the last real downturn in the oil business. I think there was some lessons learned by the people from the energy business and getting into this it's a significantly different business. Obviously, when you're looking at a large diameter oil and gas pipe transmission lines, you're looking at running 6,000, 10,000, 12,000, 15,000 tons at a time and putting together 50 car unit trains to ship and not all the businesses like that in the water transmission side. Yes, we do have projects that are 20,000, 22,000, 24,000 tons, but there's a lot of 3,000 ton projects, 600 ton projects. So it's a significantly different business with a lot of different testing requirements. The hydro testing for the API products is significantly different than what we do in the water products. And in the water products there's a lot of fabrication that has to be done when we build out one of these engineered systems like we do in this business, which the energy guys don't do that kind of fabrication. So I think that the people that moved into that business before learned some lessons and right now, we don't see anybody picking at getting into the business. It doesn't mean that somebody won't eventually try. But I think it's a lot different business and I think the view of the marketplace is a lot different. So I think there's more caution going forward in the future before doing something like that.

Well, that’s kind of helpful. Many thanks, thank you.

Thanks Tom.

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

Thank you again for everybody joining the call today. I'd like to conclude also by thanking all of our employees for their dedication and commitment to making Northwest Pipe Company a safe place to work. We're pleased now to be operating all of our production facilities through the pandemic. In addition, bidding activity has remained strong resulting in improved backlog in precast order book. Due to the complex nature of the impact of COVID-19 on the economy, it's difficult to make forward-looking projections on our revenue and margins at this time, though we firmly believe the structure of our business remains solid. We ended the quarter with our eighth consecutive quarter of continued strong backlog over 200 million. A trend that we expect to continue through the balance of the year. We look forward to speaking with you again on our third quarter call in November. Until then, everyone stay safe. Thank you.

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