NWPX Infrastructure, Inc. (NWPX) Q1 2021 Earnings Report, Transcript and Summary

Good morning and welcome to the Northwest Pipe Company's First Quarter 2021 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. Please go ahead.

Good morning, and welcome to Northwest Pipe Company's first quarter 2021 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, May 3, 2021 at approximately 4:00 p.m. Eastern Time. This call is being webcast and it is available for replay. As we begin, I'd like to remind everyone that the statements made on this call regarding our expectations for the future are forward-looking statements, and actual results could differ materially. Please refer to our most recent Form 10-K for the year-ended December 31, 2020, and in our other SEC filings for a discussion of 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 first quarter 2021 performance. As of March 31, our backlog including confirmed orders for the Northwest Pipe Legacy business was approximately $210 million, compared to $221 million at the end of the fourth quarter of 2020, and $224 million at the end of the first quarter of 2020. Despite the delays in bidding that we've seen over the last several months related to the COVID pandemic, we've been able to continue to maintain a steel pressure pipe backlog over $200 million for the 11th consecutive quarter, which we believe remains strong by historical standards. Over the past 11 quarters, our backlog has fluctuated between $201 million and $276 million. To elaborate further, our steel pressure pipe backlog has continued to be adversely impacted by bidding delays that began in the second-half of 2020 related to the pandemic. However, I'd like to reiterate, these are not project cancellations, but simply delays that we believe are temporary in nature. Aside from these delays, the current steel pressure pipe bidding schedule continues to look strong. And it currently appears that project requirements are beginning to build up, which could very well result in an extended period of very strong upcoming demand. In addition, our order book for our precast concrete business remained elevated throughout the first quarter, despite being a seasonally slower time of year. And since the end of the first quarter, our precast order book has continued to gain strength. Ongoing strong performance in precast concrete contributed to the increase in our revenue during the first quarter as this business is beginning to serve as a stabilizer to offset periods of choppiness in the steel pressure pipe business, especially during the challenging markets we're seeing today. We generated first quarter net sales of $72.3 million, which included a $12.3 million contribution from Geneva. Our first quarter gross margin of 12% is similar to what we saw in the first quarter of 2019 and 2020. Both revenue and gross margin from our legacy steel pressure pipe business were negatively impacted by production delays, which affected both product mix and timing. The production delays were due to customer-driven delays on orders that were already in backlog, steel market supply and delivery disruptions has postponed the production of orders, and adverse nationwide weather events in January and February which resulted in our plant in Saginaw, Texas, being shut down for almost five days, and portions of our plants in Parkersburg, West Virginia, and Portland, Oregon being closed for multiple days. We expect the second quarter of 2021 will remain challenging, due to ongoing capacity constraints and supply issues in the steel market, potentially resulting in additional production delays, and bidding delays, most of which are attributed to COVID disruptions, but are diminishing as we move through the second quarter. All that said, the ongoing bidding calendar for steel pressure pipe business continues to look strong. And at the present time, it appears that the recent bidding delays are causing project requirements to pile up, which could indicate an extended period of very strong upcoming demand. In addition, our precast order book remains elevated and is currently continuing to gain strength, which is a very good indication the precast business will remain strong for the near-term. As a result, we continue to be cautiously optimistic that market conditions will begin to stabilize in the second-half of 2021. Next, I'd like to turn to a discussion on our two-pronged growth strategy. Our primary focus remains on driving growth in the precast concrete market. We reached the first anniversary of our acquisition of Geneva Pipe and Precast in February, and are very pleased with how well the integration process has gone over the course of the past year. Since then, we've benefited from the transactional nature and higher product margin opportunities in the precast concrete business, which has helped offset these current slower periods in our legacy steel pressure pipe business. Our strategy is to continue to grow in this market via acquisitions and potentially through organic growth opportunities at some of our existing facilities across the country. Our acquisition pipeline remains solid with multiple potential targets that we're actively evaluating with a focus on organic growth potential, strong margin characteristics and cash flow. Building cash on our balance sheet remains a key focus in order to properly execute our strategy. We ended the first quarter with a strong cash balance of $29.9 million, despite using some cash during the first quarter to ensure ample inventory, as well as to pay down some debt. The second prong of our strategy is to maximize our core steel pressure pipe water transmission business in order to maximize shareholder value. Over the last three years, we've made significant progress through cost reduction measures in lean manufacturing to drive further efficiencies and as mentioned on our last call, we're currently working with outside engineering resources to explore opportunities for creating additional efficiencies to drive further cost reductions. Before I review current and upcoming water transmission projects, I'd like to highlight our recent new product launch in the precast concrete space. The perfect pipe in line manhole systems, which we believe have significant organic growth potential. As recently announced, Geneva began manufacturing and distributing line reinforced concrete pipe and precast manhole systems within North America in April. We believe the perfect system provides superior performance and longevity over sanitary sewer options and is focused on providing municipal wastewater management with a weak in corrosion proof barrier for use in various applications. We look forward to working with regional engineers and municipalities to demonstrate the perfect system and line manhole system as a low maintenance, long-term cost effective sewer management solution. I'll now turn to look at current and upcoming water transmission projects. In the Texas market, the ongoing multiyear multi-agency Houston surface water program is expected to bid multiple segments in 2021, representing 27,000 tons of pipe for the West and North Harris County Regional Water authorities. We anticipate those authorities having additional projects representing 25,000 tons beyond next year. The next new reservoir to be built in Texas is Lake Ralph Hall for the Upper Trinity Regional Water District. This is another major program currently in design that includes a new dam and pipeline to move water into the DFW Metroplex. The pipeline represents 17,000 tons of pipe, construction is now expected to begin late 2022 to early 2023. There is currently a bid package for the dam construction phase. The Alliance Regional Water Authority program in Central Texas is another multi-agency Regional Water program. The program includes a large pipeline, pump stations and treatment facilities and represents 15,000 tons of pipe. Construction is expected to begin in 2021 and appears to be holding the forecasted timeline. In the Western market, California's Prop 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 those funds have been appropriated for various projects as of the 2020-21 fiscal year. We expect requirements for these projects to stretch out over the next several years. Water reuse programs have generated new opportunities in California market on which we expect to see bidding activity continue for the next year. We have identified three sizable projects bidding in 2021, representing 6,600 tons. MWD is heading a regional reuse pilot project in conjunction with the LA 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 six months and construction of full-scale treatment and conveyance facilities could begin as early as 2025. The PCCP rehabilitation program will result in about 5,000 tons annually over the next two to three years. We have seen a slowdown in work this year, which appears to be COVID related, so the timing of these projects has shifted to later this year. The site's reservoir is a water storage project does receive funding from Prop 1. It will involve over 30 miles of 144 inch pipeline. The project is forecasted to begin in 2024, 2025. The 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 78 inch pipe with construction tentatively scheduled for 2024. In North Dakota, progress has slowed on the 140 mile 87,000 ton Red River Valley Water Supply project. The two mile demonstration project bid in January of this year, and was awarded to Northwest Pipe. The bulk of the project is dependent upon 2021 legislative session to commit to full funding. We're closely tracking the outcome and further budget approval now and discussion at the State Legislative Assembly. In Colorado, we're tracking the late 2020 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. In summary, despite some of the current challenges in the steel pressure pipe market, the near-term bidding schedule for steel pressure pipe remains solid. We continue to believe that we're the supplier of choice in steel pressure pipe market with the widest range of capabilities of anyone in the business. The project bidding delays that we've seen seem to be causing project requirements to pile-up, which could result in an extended period of very strong upcoming demand and the need to replace an aging water transmission grid system to meet the growing infrastructure needs in the U.S. remains critical. In addition, the continued momentum from our precast order book suggests that this part of our business will be strong for the near future. All of this when combined with our strong balance sheet and liquidity positions us well to execute our two pronged growth strategy. I'd like to sincerely thank all of our employees for maintaining their strong operational execution throughout the complexities of the first quarter and for doing so safely. We remain cautiously optimistic that conditions will stabilize in the second-half of 2021, in the year we'll finish strong. Looking ahead, we'll remain focused on number one, our top priority of taking every precaution to keep our employees safe throughout the ongoing pandemic. Number two, a persistent focus on margin over volume, number three identifying strategic opportunities to grow the company. And last but certainly not least, continuing to implement cost reductions and efficiencies at all levels of the company. I'll now turn the call over to Aaron, who will walk through our first quarter financial results in greater detail.

Thank you, Scott, and good morning everyone. I hope all of you and your families remain safe and healthy. I'll begin today with our first quarter results. Our first quarter net income was $2.2 million, or $0.22 per diluted share, compared to $0.6 million, or $0.06 per diluted share in the first quarter of 2020. There were no adjustments to GAAP net income to consider for the first quarter of 2021. Adjusted net income for the first quarter of 2020 was $2.9 million, or $0.30 per diluted share and included $2.8 million of transaction costs and inventory charges associated with our acquisition of Geneva, and $0.4 million of incremental production costs resulting from the fire at our Saginaw facility, which were partially offset by the $0.8 million tax impact associated with these items. Adjusted net income excludes unique and unusual items and we provide it for comparability purposes. Please refer to the reconciliation of non-GAAP financial measures in our earnings release for a comprehensive schedule detailing the adjustments. Our first quarter net sales increased 4.9% to $72.3 million, compared to $68.9 million in the first quarter of 2020. Geneva sales were $12.3 million in the first quarter of 2021, compared to $8 million in the first quarter of 2020. Please note that the prior-year included only two months in Geneva results given that acquisition closed on January 31 of last year. Legacy revenues decreased 1% from the year-ago quarter due to a 2% decrease in selling price per ton resulting from a change in product mix, which was partially offset by a 1% increase in tons produced resulting from changes in project timing. Due to the unique nature of the water transmission systems we manufacture, production tons are not always the best indicator of productivity and comparability of our metrics between periods are highly dependent on project timing and project product mix. Gross profit decreased to $8.8 million or 12.1% of sales compared to $9.6 million, or 13.9% of sales in the first quarter of 2020 primarily due to changes in product mix for steel pressure pipe. This is partially offset by the extra month of margin contribution from Geneva. For comparison purposes, gross profit in the first quarter of 2020 was reduced by $0.4 million of incremental production costs for the Saginaw fire, and $0.3 million in acquisition related inventory charges. Excluding these items, our gross profit margin for the first quarter of 2020 would have been 14.9%. Selling, general and administrative expenses decreased 26.6% to $5.8 million in the first quarter of 2021, compared to $7.9 million in the first quarter of 2020. The decline was primarily due to lower acquisition related transaction costs that were incurred in the first quarter of 2020 with the addition of Geneva and partially offset by $0.4 million and higher compensation related expenses in the first quarter of 2021. Barring anything transactional in nature, we expect selling, general and administrative expenses to be approximately $23 million for the full-year of 2021. Our income tax rate in the first quarter was 21.7%, compared to 45.6% in the first quarter of 2020. The first quarter 2021 rate is less than 26.5% we were expecting for the full-year due to a combination of a windfall benefit on stock-based compensation adjusted during the quarter, which was pronounced by relatively low pretax book income earned to this point in the year. The unusually high effective income tax rate in the first quarter of 2020 was impacted by non-deductible expenses associated with the acquisition of Geneva. Now transitioning to our cash flows and financial condition, we used $0.6 million in net cash from operating activities during the quarter due to increased working capital funding requirements. This compare to $15 million in net cash provided by operating activities in the first quarter of 2020, which was largely due to favorable swings in working capital. As Scott mentioned, we have experienced challenges from volatile steel markets and inventories and contract assets are expected to increase through 2021 as recent increase in market prices become fully reflected. Depending on steel availability and other factors through the balance of the year, we expect the effect of steel prices could add upwards of $20 million in additional working capital requirements for the business. Thankfully, our balance sheet and liquidity remains well positioned to manage this market challenge in addition to financing our growth strategy. At March 31, our total available liquidity was nearly $82 million, consisting of $29.9 million in cash and cash equivalents and approximately $52 million from our line of credit. We had $8.4 million in debt outstanding at the end of the quarter. Depreciation and amortization was $3 million in the first quarter, and expected to be in the range of $12 million to $14 million for the full-year, depending on production levels. Our first quarter 2021 capital expenditures totaled $1.9 million. We expect the pace of CapEx spending to pick up, which will result in full-year spending between $12 million and $15 million consisting entirely of maintenance CapEx. In summary, we were very pleased with the first quarter 2021 financial results, especially considering the challenging macroeconomic climate given supply chain constraints and the ongoing pandemic. I'd like to extend my thanks to all of our dedicated employees and our loyal shareholders for their ongoing support at Northwest Pipe. I will now turn it over to the operator to begin the question-and-answer session.

We will now begin the question-and-answer session. [Operator Instructions] Our first question today will come from Brent Thielman with D.A. Davidson.

Hey, good morning, Scott and Aaron.

Hey, Brent. How are you? A – Aaron Wilkins: Hello, Brent.

Okay. Thank you. Scott, you sounded a bit more confident maybe about the slate of jobs you've been tracking, starting to solidify in terms of schedule. I guess any more discussion around that, are you seeing some jobs that come forward maybe here in the second quarter that might give you a little more comfort that the pushes could swell down? I'm just looking for anything else you can offer there.

Yes, I think Brent, like we talked about on the last call, I mean, the second-half of 2020 was -- we saw somewhere in the area of about $130 million worth of work, sled out of the second-half of 2020, and out of the first quarter of 2021, somewhere probably in the area of between $40 million and $50 million. And ultimately, when you look out into the future, there's already a pretty good slate of jobs that are bidding out into the future. What we see is those move-outs starting to abate now, and then really slow down, and the jobs are starting to kind of gain attraction in the certain area. And it certainly appears at this point, obviously things can always change, but it certainly appears at this point that things are starting to stack up and we could have a pretty good period of demand here for a while coming up now. You can look at that and say we think that stability starts to come more in line with the jobs, maybe in the second-half of the year, maybe in later second-half of the year. But it certainly appears that things are starting to stabilize a little bit on where the jobs are.

Okay, all right. Appreciate that. The order book at Geneva sounds pretty encouraging, I guess any more context where that sits that maybe against the timeframe that that you've owned it. And are any of these new products that you're introducing meaningful to that at this point? Or is it still pretty early on?

I think when you look at to each of the question on the order book. First, we had a pretty strong order book, even as we proceeded through the first quarter for Geneva, which obviously, as we've talked about is always a slow quarter. As we've come out of that slow quarter, the order book is continued to gain strength. And at this point, I think it's probably as strong as we've seen it since we've had them as part of the company. And look at the new products that are out there, the perfect pipe and the line manhole; unfortunately the pandemics slowed us down a little bit with getting those started. So there's not -- there's some growth in those as we go forward, but we think there's a lot of organic growth potential, because when you look at those products, they are a liners to protect not only reinforced concrete pipe. But liners to protect manholes and troughs and manuals against corrosive sewer application in hydrogen sulfide gas and sewers, which really extend the life of those products significantly longer than what traditional products do providing a very long-term cost effective product to the ultimate end users in municipalities going forward. We think that products got a lot of legs going forward. And we're just starting to get started. Probably somewhere in the area of between 42% and 47% of our businesses RCP and manhole products on the precast concrete side, and obviously, we'd like to liners as many of those as possible. So we're on a pretty heavy marketing campaign with that now, and really working with the end users to get that into the system. So we're really just getting started right now.

Okay, understood. And I just get a question it was just, whenever you get some inflation in the market. I would think it get some of the industry participants pricing in the same direction. Is that what you're seeing, at least on the work that is coming to bid right now is pricing irrational in the market. Despite all these delays, and given the movement and cost?

What I would say is when you get a situation, like we saw in the second-half of '20, and for that matter what we saw in the first quarter of 2021, where you get all these projects that start to move out to later in the year. You get a little bit of panic bidding that goes on, that it starts to affect the margins for a little bit of a period of time. But as we've talked about that that certainly appears as it starting to diminish as we go through the second quarter, and what we're seeing is that panic bidding diminish along with it, because I think there's people in the market looking out there with everything that's starting to come forward with jobs out there right now, both near-term and mid-term and potentially longer-term. And so I think things were starting to get a little bit more rational with that right now. And I would say that would the steel thing. And as you know, my first 25 years was in the steel business running steel plants and selling steel. The steel prices changed very, very rapidly. So I believe in most cases that the project pricing is keeping up with that. In some cases, it's changed so rapidly that -- and I think these are few cases that you just couldn't completely keep up with, but in most cases it is. So, I think that's pushing the project pricing higher as we go forward. And one of the things I would say is what we're seeing out of steel right now is really the tip of the iceberg. When you look at what average steel pricing was in any publication at the end of the fourth quarter for the fourth quarter of 2020 it was like 782 for hot rolled band. That's just FOB the mill-based hot rolled band. When you look at the end of the first quarter it's about $1200 a time, and where we see it now is somewhere in the area $1400 a ton. So I think we're just starting to see the tip of the iceberg with what it's doing the pricing on projects, as far as pushing the pricing up.

Okay, just last one. Scott, I guess a lot in the news about infrastructure bill and a lot of different numbers driven around that are big numbers. Anything you take from what you've seen so far that we could think about in the context of your business?

Yes, I think it's all very positive. We're obviously excited that we've got an amendment to extend the Safe Drinking Water Act, which sets aside about $35 billion for State Revolving funds. And it's generally leaked into the State Revolving funds, somewhere about $2 billion to $3 billion a year. So that's been extended, I think is as far as the major infrastructure package or the $2 trillion package that's being talked about at this point. It looks like right now there's about $111 billion, that's over a relatively long period of time, slated for water it. Part of that somewhere in the area of about $45 billion looks like it's try -- it's to remove lead pipes from the portable water system. So there is no exposure like that happened in Flint, Michigan. So, that leaves somewhere in the area of about $56 billion for other water projects over that period of time, which we're pretty excited about in resulting in some other major projects coming through the system. So I think that just kind of adds to demand as we look out into the future.

Okay, great. Well, thanks for taking the question, Scott.

Absolutely, Brent.

Our next question comes from Gus Richard with Northland.

Yes, thanks for taking the question.

Hi, Gus.

Hi, guys. The environment is pretty dynamic. Things are kind of stacking up. Fuel prices are going crazy. Can you give us a sense at least qualitatively what -- the puts and takes on gross margin over the next three or four quarters?

I think that like we talked about in the call. I think the second quarter remains pretty challenging. Gus. I think we have in the second quarter is a situation where you had the big delays continuing to happen in the first quarter. Like I said, somewhere between $40 million and $50 million worth of work and some of that would have likely run in the second quarter of this year. When you look at the steel mill market supply demand and delivery issues probably the height of this is going to be the second quarter, because one we're in the middle of the pricing moving up and things of that nature. But in the second quarter, they're also having facilities outages, where we have a few blast furnaces down for relying that it's going to happen in the second quarter. So that probably takes somewhere in the area of about another million tons availability to the market out. So we believe that we could continue to see delivery issues and things in the quarter related to steel supply. As we get into the second-half of the year, I think that as I've said, we're starting to see the jobs delaying into the future starting to diminish. So that starts to normalize, I mean the steel prices are going to remain high in the second-half of the year. But I think the availability starts to improve a little bit, and we've got some additional capacity, new capacity starting up later in the year, and I think some of the mergers that have taken place in the steel industry get their legs under them and really start to be able to supply to the market a little bit better. And I think if the, the jobs continue to stack up like we see in the demand remains where we see, we're going to go into an area of relatively strong demand show. So if that happens in jobs, don't continue to move around. I think you see upward pressure on the margin from here as you go through the rest of the year.

Got it. That's very helpful. And then just on the Texas market, you've got a new competitor there, and I'm sure they need to sell their plant. You use the pricing pressure from that abated or it sounds like it is, but I just want to make sure?

I think what you're going to have when you get a new entrance into the market. What you have is a situation where at least for a period of times, if you've indicated where prices and margins come under a little bit of pressure in this situation, it's probably more like the margins come under a little bit of pressure because the steel price is certainly forcing the project pricing up. You know, I think you see that for a period of time that could stretch out for several months, maybe a little bit longer, but when you see the strong demand that we see coming forward and continuing to come forward in Texas, I think that levels out after a period of time, as the industry wide backlogs start to improve. And then the margin levels in that specific region recover and start normalizing a bit. And the people down there with a new plan have been in the business a long time. And they definitely they know the market, so certainly we think things seemed normalized after several months or so with that going on, as long as the demand continues to remain strong down there.

Got it. And then last one for me, you talked a little bit about continuing to work on manufacturing efficiencies, cost reductions, et cetera. Can you have any targets on what you can do in order to bring your cost structure down, any guidance there?

Yes, what we try to do is target the man hours for specific jobs and the reduction in man hours or hours per specific job on an annual basis, measuring it from year to year. And we're normally targeting anywhere from about a percent to 2% on that on an annualized basis.

Got it.

[Multiple Speakers] -- when you start looking at the lean manufacturing pieces and porch inefficiencies with mean there's a home other level of costs that we were looking at taking out, and we're looking at -- we've got an outside firm helping us with efficiencies now, looking at things like automation and things like that to continue to drive efficiencies at our plant. So cost reduction work never ever stops so.

Got it, okay. All right, very good. Thanks so much. That's it for me.

[Operator Instructions] Our next question comes from Mike Morales with Walthausen & Company.

Hi, good morning Scott and Aaron. Hope we're staying safe, and while I appreciate you taking the questions.

Hi, Mike.

Hi, Mike.

Hi, folks. So I want to circle back really quickly again to the comment that you had in the release and in the prepared remarks about project requirements stacking up, just to make sure that I fully understand this and have a sense of what it means. So Scott, if I understand correctly, are you saying that all of these programs that didn't bid and they weren't canceled are, that bidding pressure is alleviating and potentially they're going to bid and enter production sometime here in the second-half, and that should help your utilization and margins going along with it, is my timeline, right? Am I thinking about things the right way there?

I think what you see is approximately $130 million might get pushed out of that second-half of 2020 and $40 to $50 million that pushed out of the first quarter, pushed out in some of that, we believe starts to take place in the second-half of the year, but some of it could also leak into 2020. So it just depends where it stops, but what we're seeing right now, and Mike, you've been around this for a while too, how these projects can move around. We really can affect how they move around, but it does appear that the moving around is starting to diminish and the projects are starting to get footholds in certain places. And we think that could be taking hold in the second-half of this year. But again, some of it could be out into 2022 too.

Sure. And I hesitate to use this phrase and it kind of sounds like there's a little bit of a coiled spring as it relates to the bidding that's been put off for now in the business that you guys have the opportunity of winning and just from an earnings perspective that seems like it could be a pretty compelling story over the next year or two, as things kind of catch up. You know, you touched on I guess the real wrench in all of that is the raw materials and what's going on there. And I know Northwest has always said the high steel prices don't bother you guys, but volatile prices to do. One thing that a lot of companies have been talking about is labor. How are you guys managing on labor? Are there any headwinds that you can call out there? Is that not as big a deal for you guys as it is for some others?

No, we are constantly working on hiring people especially people in the plants where we're labor is getting a little bit harder to get. We've actually put some full-time resources on that mic because it's been such an issue since the beginning of the pandemic. And we continue to work our way through that, but I think everybody is seeing a very similar issue that the amount of potential workforce that's out there is a little bit slim right now. And it's got you be a constant focus to make sure that your replacing or hiring people that you need for every one of the points.

Right. From a capacity standpoint, is there any need for you folks to add capacity in the legacy business to take advantage of any of this strong bidding environment that you find yourself then?

No, I think we probably as far as looking at what our rated capacity is, Mike, we probably have somewhere in the area of about 180,000 tons of rated capacity at the plant. So we have plenty of open capacity to run additional work. If all this work that appears to be stacking up right now happens, then certainly the capacity that we have we'll handle it.

Fantastic. Scott and Aaron, I appreciate the color as always. Be well, thank you.

Thanks, Mike.

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

Thank you. And thanks again to everybody for joining the call today. I'd like to conclude by reiterating our cautious optimism on the outlook for the remainder of the year. I think despite the bidding delays that continued in 2021, we continue to believe that the structure of our business remains strong and the need for critical water infrastructure in the United States remains critical. I think the need is evident based on our backlog, which surpassed 200 million mark for the 11th consecutive quarter that even with jobs that are continuing to shift around. The demand environment remains healthy and we're optimistic that we'll continue to grow and expand our precast operations with the support of our strong balance sheet and healthy liquidity position. Thank you again to all of our loyal employees, suppliers, customers, and stockholders for your continued dedication to Northwest Pipe Company. We look forward to speaking with you all again on our second quarter call in August. So, thank you and be well.

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