Good morning. Welcome to Northwest Pipe Company First Quarter 2023 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [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 Northwest Pipe Company. Please go ahead.

Good morning, and welcome to Northwest Pipe Company's first quarter 2023 earnings conference call. My name is Scott Montross, and I am the President and CEO of the company. I'm joined today by Aaron Wilkins, our Chief Financial Officer. By now, all of you should have access to our earnings press release, which was issued yesterday, May 3, 2023, at approximately 4:00 P.M. Eastern Time. This call is being webcast and it is available for replay. As I begin, I'd like to remind everyone that statements made on this call regarding our expectations for the future are forward-looking statements, and actual results could differ materially. Please refer to our most recent Form 10-K for the year ended December 31, 2022 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 first quarter performance and outlook. Aaron will then walk you through our financials in greater detail. Our first quarter results came in slightly better than our expectations. We generated revenue of $99.1 million, a decline of 9.4% compared to the prior year quarter. Revenue from our steel pressure pipe segment totaled $63.5 million, reflecting a decrease of 14.9% over the prior year quarter, mainly due to anticipated customer-driven delays, which affected the production timing of our projects in backlog, in addition to severe weather events, which led to unscheduled downtime at multiple of our facilities in the first quarter. This resulted in relatively flat production volume year-over-year. That said, we ended the quarter with a strong backlog, including confirmed orders near record territory at $370 million, which was down marginally from our all-time…

Thank you, Scott, and good morning everyone. I'll begin today with an overview of our profitability. Consolidated net income for the first quarter was $2.4 million or $0.23 per diluted share compared to $3.6 million or $0.36 per diluted share in the first quarter of 2022. Consolidated net sales decreased 9.4% to $99.1 million compared to $109.3 million in the first quarter of 2022. SPP segment sales decreased 14.9% to $63.5 million compared to $74.7 million in the first quarter of 2022 driven primarily by a 4% decrease in our tons produced mainly due to changes in project timing and an 11% decrease in our selling price per ton due to decreased raw material input costs. Precast segment sales increased 2.7% and to $35.6 million compared to $34.6 million in the first quarter of 2022, primarily due to an increase in selling prices resulting from the high demand for our concrete products in addition to increased material costs. Consolidated gross profit increased 12.1% to $16.6 million or 16.7% of sales compared to $14.8 million or 13.5% of sales in the first quarter of 2022. Steel pressure pipe gross profit increased 8.2% to $7.8 million or 12.2% of segment sales. This compared to gross profit of $7.2 million or 9.6% of segment sales in the first quarter of 2022. As a reminder, our SPP gross margin in the first quarter of 2022 included a $2 million charge for a product liability claim reserve. Without this, our gross margins would have been $9.2 million or 12.3% of segment sales in the first quarter of 2022. Precast gross profit increased 15.8% to $8.8 million or 24.7% of precast sales from $7.6 million or 21.9% of segment sales in the first quarter of 2022 primarily due to the improved pricing. Selling, general and administrative…

We will now begin the question-and-answer session. [Operator Instructions] The first question comes from David Wright with Henry Investment Trust. Please, go ahead.

Hey. Hi. Good morning.

Hey, David. How are you doing?

A lot to digest there, lots of good information and thanks for all of it. We've got steel SPP. Q2 and Q3 last year were really strong years for the company, really strong quarters, excuse me. Your commentary suggests that Q2 this year could be close to as good as last year. Did I hear that correctly?

David, after a pretty slow first quarter, right? Because of weather and a lot of different things, we're actually carrying a backlog right now in tons. It's about 12% higher at the end of the first quarter this year than it was last year. So we're set up to really get back on a pretty similar revenue trajectory that we saw in steel pressure pipe in the rest of the quarters this year. But with improved margins, because the big bidding activity that we saw at the end of 2022. So we're pretty excited about the way that steel pressure pipe is looking for the rest of the year.

So then the kind of the variance in year-over-year comparisons for the next couple of quarters will depend more on what precast does?

Yes, I think so. But the interesting thing about precast, David, is we are in two of the very, very hot markets in this country, one Utah, which has really low unemployment and a significant net migration rate into the state of Utah and a significant requirement for housing builds. And we still have a little bit of pent-up demand from the supply chain issues in Utah during the pandemic. So really what we're seeing along that part of our business with Geneva is, we're seeing the market right now that's a little bit skittish and people are holding on their quotes a little bit longer. And there are certain products that may be down a little bit, but some of the major products are still very strong. Our lead times are a little bit shorter than they were last year. But last year like we said in some of the calls, we got a little bit overbooked. But we're still seeing Utah as being pretty busy. And in Texas on the Park side anyway which is obviously Geneva is mostly residential there's probably 85% residential for Geneva or 80% residential for Geneva anyway. But Park is about 85% non-residential. And we're still seeing a very, very strong non-residential market in the State of Texas and really seeing the Park business not having dropped off at all. So that's why we said during the call, we're seeing strong Steel Pressure Pipe for the rest of the year. And we're seeing a Precast market that's really down only modestly at this point from what a lot of people consider to be an all-time record year in 2022, but with margins that are in line with what we saw last year. So it really feels like we're setting up for another strong year in 2023.

Okay. And then my other question you talked about California Proposition one and all the different pretty large projects that could lead to over the next -- you said, the next five years. Just kind of big picture and obviously not everything happens at the same time, but big picture just does the contracting capacity exist in California for multiple projects like that to be going on at the same time?

Yeah. I would say David, that all the major contractors that we deal with have multiple locations. And especially in the locations or the markets that are traditionally really strong Steel Pressure Pipe markets. And really those are California and Texas. So yeah, I would say that the contracting capacity is likely more than enough to handle those big projects as we go forward into the next three or four years.

Okay. Thanks. Thanks for taking my questions.

Absolutely.

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

Yeah. Just a few things as we close, I'd like to thank everybody for joining the call today. But again, as we get through the first quarter, we ended the first quarter with a backlog in tons it's up 12% versus what we were last year first quarter and really kind of positions us to really have a really a solid Steel Pressure Pipe year for the rest of this year. But like I said before, with improved margins and precast, like we said a little bit earlier with David's questions, even with the headwinds in residential housing we're in two of the best markets, and we're expecting to see a precast. And precast related market that is only modestly off of what we saw in 2022. And I think the last thing I'd like to say is, if you look at where the companies come from in the last five years in 2017, the company had about $132 million in revenue and about $5 million of gross profit and really the minimis EBITDA, when we finished 2022 with $458 million in revenue and in the mid-80s of gross profit in the low-to-mid-60s of EBITDA. So we've come a long way in the last five years. And we feel like we are just getting started on that growth path to continuing to grow and become more profitable and to become a better holding for our shareholders. So thanks everybody again for joining the call today. And we'll talk to you again in a few months in August, right? In the August time frame. So thank you very much.

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