NWPX Infrastructure 2026 年第三季法說會：銷售額創新高與 4.35 億美元 WTS 在手訂單

重點摘要

• NWPX Infrastructure 公布 2026 年第三季淨銷售額創歷史新高，達 1.794 億美元，年增 18.7%；淨利成長 35% 至 1,820 萬美元，相當於每股稀釋盈餘 1.86 美元。
• 輸水系統業務營收成長 27% 至創紀錄的 1.319 億美元。包含已確認訂單在內的在手訂單達到創紀錄的 4.35 億美元，相比之下 6 月 30 日為 4.23 億美元，一年前為 3.01 億美元。
• NDA 專案貢獻了約 3,100 萬美元 的第三季營收。管理層表示，該專案總價值約為 5,600 萬美元，其中約 4,000 萬美元已在第二季與第三季認列，剩餘部分可能延伸至 2027 年。
• 預鑄產品營收微增 0.6% 至 4,750 萬 美元，儘管出貨量下降 4%。毛利率擴增 160 個基點 至 22.9%， 受惠於產品組合改善及非住宅業務毛利率提升。
• 季度營運現金流增至 2,740 萬 美元，自由現金流則增至 2,040 萬 美元。管理層目前預期 2026 財年全年自由現金流為 6,200 萬美元至 7,200 萬美元。
• 儘管出貨天數較少、假期停工以及可能的天氣因素干擾，管理層仍預計第四季合併表現將超越 2025 年第四季與 2026 年第一季。

主要財務數據

業務與營運 表現

輸水系統

WTS 仍為主要成長驅動力。營收成長 27% 至 1.319 億美元，反映出產量（噸）成長 7% 以及每噸平均售價成長 19% （受產品組合影響）。

毛利成長 23.4% 至創紀錄的 2,730 萬美元。毛利率下滑 60 個基點至 20.7%，主要歸因於專案生產組合調整，不過今年前三季的毛利率仍較去年同期高出約 180 個基點。

該部門在第三季將約 1.44 億美元 的工作量轉化為在手訂單。管理層表示，10 月的投標活動保持強勁，且大部分預期 2027 年進行的生產已反映在在手訂單中。若扣除 NDA 專案，WTS 在 2026 年前九個月的營收仍將比去年同期成長約 10%。

預製業務

預製業務銷售額微幅增加至 4,750 萬美元。產品售價上漲 3%，主要源自產品組合，部分抵銷了出貨量下滑 4% 的影響。本季包含 9 月部分時間來自 Serpentix 約 100 萬美元 的營收。

該部門的在手訂單總額為 6,700 萬美元，其中包括來自 Serpentix 的 1,000 萬美元。原有預製業務的在手訂單為 5,700 萬美元，低於 6 月 30 日的 6,100 萬美元，但高於去年同期的 5,500 萬美元。

資料中心成為持續擴大的需求來源。截至第三季，NWPX 報價了 3,350 萬美元 的資料中心專案，並取得超過 1,100 萬美元 的訂單。管理層估計 2026 年期間已出貨約 700 萬美元，並表示資料中心專案的利潤率通常高於傳統預製業務訂單。

NWPX 也在其預製產品擴張策略下報價了 5,830 萬美元，並取得 970 萬美元 的訂單，超過 2025 全年的總接單量。

收購 Serpentix

NWPX 於 9 月動用 4,970 萬美元 收購 Serpentix Conveyor。該公司專門製造工程輸送機系統，主要用於市政廢水處理及工業製造設施。

管理層指出，Serpentix 補足了 Park Process 在脫水、分離與混合方面的能力。管理層並表示 Serpentix 的利潤率顯著高於傳統預製業務，並將廢水處理視為未來成長與收購的潛力平台。

管理層指引

• 第四季表現： 管理層預計合併業績將優於 2025 年第四季與 2026 年第一季。
• WTS 業務： 在手訂單預計到年底將維持高檔。NDA 專案應會在第四季貢獻額外營收，但部分工作可能依承包商的進度安排而延至 2027 年初。
• 預製業務： 管理層預計第四季表現將與第三季大致持平，並維持 2026 全年預製業務營收創歷史新高的預估。
• 自由現金流： 2026 全年指引為 6,200 萬美元至 7,200 萬美元。
• 銷管費用： 全年合併銷管費用預估為 5,500 萬美元至 5,600 萬美元。
• 資本支出： 全年支出預期為 2,100 萬美元至 2,300 萬美元，其中包括約 600 萬美元用於產品擴展專案及其他成長計畫。
• 折舊與攤銷： 全年費用預計為 2,200 萬美元至 2,300 萬美元。
• 稅率： 全年有效稅率預計約為 23% 至 24%。

風險與值得關注的領域

• 受高利率影響，住宅營建依然低迷，而部分商業非住宅市場也有所放緩。
• 由於利率、燃料成本以及整體經濟的不確定性，部分 Precast 客戶延後了出貨。管理層表示這些屬於延期而非取消訂單。
• 鋼材交貨週期雖然仍偏長，但已開始趨緩。管理層表示，進入第四季時鋼材成本約為每噸 1,300 美元，這可能會影響營收比較與專案經濟效益。
• 剩餘 NDA 專案營收的認列時機取決於承包商接收貨物的速度。管理層目前尚未看到已確認的後續 NDA 專案。
• 第四季面臨正常季節性因素影響，包括出貨天數減少、假期停工以及天候干擾。
• WTS 的現金循環週期改善至約 99 天，優於前一年的 150 天，但管理層認為目前水準長期而言無法持續，預期將有所放緩。

分析師問答重點

• 資料中心商機： 管理層表示，單一商機規模已從約 30 萬至 40 萬美元擴大至高達 300 萬至 500 萬美元 的專案。若市場熱度持續，預計報價、接單與出貨量將繼續成長。
• Precast 產品組合轉變： Geneva 廠區過往住宅業務比重約為 85%，預計至 2026 年將降至約 40% 住宅，產能將由非住宅、機構與資料中心等專案填補。
• 2027 年 WTS 展望： 管理層未提供正式財測指引。管理層指出，要填補 NDA 專案的營收將是「艱鉅的任務」，但並非不可能，且根據積壓訂單與投標活動，預期 WTS 的基礎業務仍將保持強勁。
• 積壓訂單結構： 管理層表示，WTS 積壓訂單的增加反映了價格上漲與實體出貨量成長。第三季每噸營收年增 19%，而鋼材價格年增約 12%。
• 營運資金： 公司預期 WTS 現金循環週期將介於目前的 99 天與前一年的 150 天之間，同時將繼續優先推動預收帳款與現金產生。

法說會完整逐字稿

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完整財報電話會議逐字稿

管理層陳述

Operator

Greetings. Welcome to the NWPX Infrastructure's Third Quarter 2026 Earnings Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to Scott Montross, President and CEO. Thank you, Scott. You may begin.

Scott Montross

Good morning, and welcome to NWPX Infrastructure's third quarter 2026 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 28, at approximately 4:00 p.m. Eastern Time. This call is being webcast, and it is available for replay.

As we begin, I would 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, 2025, and in our other SEC filings for a discussion of such risk factors that could cause actual results to differ materially from 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 our outlook for the fourth quarter of 2026, and then Aaron will walk you through our financials in more detail.

Third quarter marked another outstanding quarter for NWPX Infrastructure as we delivered record financial performance across several key metrics. Net sales were up 18.7% year-over-year to a record $179.4 million, primarily driven by strength in our Water Transmission Systems business.

Consolidated gross profit totaled a record $38.2 million, up 18.8% from last year, with our gross margin at 21.3%, consistent with the prior year.

Strong execution across the business drove significant year-over-year earnings growth with net income increasing 35% to $18.2 million or $1.86 per diluted share. We also generated $20.4 million of free cash flow during the quarter, further strengthening our financial position.

These results reflect the strength and resilience of our business, disciplined execution across our operations and our continued ability to capitalize on favorable market conditions.

Turning to our WTS segment. Revenue reached a quarterly record of $131.9 million, up 27% year-over-year with strong margin performance. Our performance reflected higher production volume with tons produced up 7%, supported by strong project execution and favorable project timing.

Additionally, selling prices per ton were up 19% year-over-year, driven by changes in product mix. Steel lead times have remained extended during the quarter, but have begun to moderate.

Importantly, our long-standing relationships with domestic mills continue to support reliable access to steel and our ability to serve our customers. Additionally, the significant NDA project we have discussed throughout the year was a meaningful contributor during the third quarter, generating approximately $31 million of revenue.

We expect the project to make additional contributions in the fourth quarter and possibly into 2027 as well. We had another exceptionally strong booking quarter with robust bidding activity, sustaining continued healthy backlog and reinforcing demand strength across our markets.

The WTS backlog, including confirmed orders, ended the quarter at a record $435 million, up from $423 million at June 30 and well above the $301 million level we reported last year at this time. Importantly, backlog continued to grow as we work through a meaningful portion of the NDA project, demonstrating the strength of the broader demand environment.

This is a good indication of how strong the bidding was in the third quarter and continues to be in the fourth quarter.

Our record backlog provides excellent visibility into future production activity and reflects continued demand for critical water infrastructure. WTS gross profit increased 23.4% year-over-year to a record $27.3 million, resulting in a strong gross margin of 20.7% compared to 21.3% last year.

This performance reflects higher volumes and strong execution, which continued to drive operating efficiencies across the business. Gross margin was modestly below the prior year, primarily related to project production mix.

That said, year-to-date, WTS gross margin was approximately 180 basis points above prior year period, underscoring the continued strength of the business.

Now turning to our Precast segment. Precast revenue slightly increased 0.6% year-over-year to $47.5 million. Our performance reflected a 4% decrease in volume shipped.

However, selling prices were up 3% over last year, primarily reflecting favorable changes in product mix. Precast gross margin improved a 160 basis points versus the prior year period.

Approximately $1 million of revenue contribution came from Serpentix, reflecting only a partial final month of the third quarter contribution from the September acquisition.

While residential construction remains muted, and we have seen some softening in portions of the nonresidential market, our ability to serve a diverse range of applications continues to help us navigate these conditions. We are particularly encouraged by the continued growth of our data center business.

Through the third quarter, we quoted $33.5 million of data center projects, booked in excess of $11 million worth of data center orders, and we are currently working on turning several additional large data center projects into new orders. While still a relatively small part of our overall business, it represents a growing source of opportunity, and we continue to approach the vertical selectively while maintaining our focus on our traditional precast markets.

Our quarter end Precast order book totaled $67 million, which includes $10 million related to Serpentix. The legacy Precast order book of $57 million is down from $61 million at June 30 and above the $55 million level at September 30 of last year, positioning the business well as we close out the year.

While demand in the order book remains solid, some customers delayed shipments during the quarter amid continued uncertainty around interest rates, fuel costs and the broader economic environment. This contributed to Precast revenue coming in somewhat below our expectations, but did not meaningfully change our view of the longer-term demand environment.

The resilience of the Precast business was particularly evident in this quarter. Despite the softer residential activity and some pressure within the nonresidential construction, Precast revenue remained above the prior year as we continue to pivot between residential, traditional nonresidential and emerging opportunities such as data centers.

Looking ahead at the broader market, nonresidential construction indicators remain mixed, but continue to point toward areas of opportunities. The Dodge Momentum Index was up 3.7% year-over-year in September with the commercial sector down 3% and the institutional sector up 17.2%.

While near-term activity continues to be influenced by interest rates and broader macroeconomic uncertainty, the continued strength in institutional planning supports opportunities across portions of the nonresidential construction market as we move into 2027.

In addition, during the quarter, we completed the acquisition of Serpentix Conveyor, a manufacturer of engineered conveyor systems used primarily in municipal wastewater treatment plants and industrial manufacturing facilities. The acquisition expands our participation in the wastewater treatment market and adds specialized engineered conveyance capabilities that fit naturally alongside NWPX Park's existing dewatering, separation and mixing capabilities.

Together, these businesses strengthen the wastewater platform we have been developing and broaden the solutions we can provide to municipal and industrial customers.

Integration is progressing well with the existing Serpentix management team remaining in place and helping lead the process. We see attractive long-term growth potential in the wastewater market and believe Serpentix provides us with an additional platform from which to pursue opportunities across essential water and wastewater platforms.

With 2 acquisitions completed this year, our immediate priority is executing a successful integration and ensuring we fully capture the strategic benefits of both businesses.

At the same time, we continue to evaluate attractive acquisition opportunities that can expand our geographic reach, enhance our manufacturing capabilities and broaden our product offering. Further, we are continuing to advance our Precast product spread strategy across the network, broadening our capabilities and increasing our capacity utilization.

Through September of this year, we have quoted $58.3 million worth of projects, and we have booked $9.7 million of product spread orders, exceeding total bookings for the full year of 2025.

Precast gross profit of $10.9 million was up 8.6%. Gross margin improved approximately 160 basis points to 22.9% from 21.3% last year, primarily reflecting favorable changes in product mix. The margin improvement is especially encouraging, given the lower volumes of customer-driven shipment delays as we experienced during the quarter and reflects our continued focus on pricing, cost management and operating efficiency.

I'll now turn to our outlook for the fourth quarter. On a consolidated basis, we currently anticipate stronger performance than both the fourth quarter of 2025 and the first quarter of 2026, which is particularly notable given the typical fourth quarter seasonality associated with fewer shipping days, holiday shutdowns and potential weather-related disruptions.

The strength of our backlog and the opportunities across our businesses give us confidence in our outlook as we close out the year. In our Water Transmission Systems segment, we expect WTS backlog to remain elevated through year-end, supported by continued demand for critical water infrastructure.

Our record $435 million backlog, including confirmed orders, provides excellent visibility into future production activity. In addition, elevated bidding levels that have continued into October are providing great visibility into near-term financial performance.

Based on what we are seeing today, we expect full year base bidding levels, not including the NDA project, to be stronger than what we saw in 2025. We also expect additional contribution from the previously discussed NDA project during the fourth quarter.

More broadly, the strength of the underlying WTS business gives us confidence that 2026 would have been a record year even without the benefit of this unique project. Through the first 9 months of 2026, without the contribution from the NDA project, WTS revenue would have been approximately 10% higher than the same period of 2025.

The pipeline of current and upcoming water transmission projects remains strong with attractive economics and margins supporting our outlook. For a more complete view of these projects, please refer to our investor presentation on our website.

Turning to Precast. We expect our Precast business to remain steady in the fourth quarter, supported by a solid order book and continued customer activity. We continue to expect 2026 to be a record year for Precast revenue.

While residential construction remains muted, and we are seeing some softness in portions of the nonresidential market, we continue to benefit from the diversity of our product portfolio and end market exposure. In particular, data centers continue to provide an attractive source of incremental opportunity, helping offset softness in other areas of the business.

Looking beyond the fourth quarter, the addition of Serpentix further broadens our capabilities and provides another avenue for growth across wastewater infrastructure and engineered solutions.

In closing, we delivered another outstanding third quarter, setting new records for revenue and gross profit while generating earnings of $1.86 per diluted share. WTS continues to perform at an exceptional level, supported by record backlog and continued demand for critical water infrastructure, while Precast delivered year-over-year growth and strong margin improvement.

With our expanded capabilities, record backlog and attractive opportunities across our businesses, we believe NWPX Infrastructure is exceptionally well positioned to finish 2026 on a strong note and carry that momentum into 2027.

Equally important, none of these results would be possible without our people. Our total recordable incident rate at the end of the third quarter stood at 0.8, reflecting the stability of our manufacturing environment and the continued commitment of our employees to execute our strategy safely.

I want to thank our teams across the organization for their continued execution, their commitment to our strategy and to maintaining a strong safety culture.

As we look ahead, our near-term priorities remain: 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 shareholders when M&A opportunities are limited.

I will now turn the call over to Aaron, who will walk through our financials in greater detail.

Aaron Wilkins

Thank you, Scott, and good morning to everyone joining the call today. Before we begin, I'd like to mention that unless otherwise stated, all financial measures in my remarks refer to the third quarter of 2026, and all comparisons will be year-over-year comparisons versus the third quarter of 2025. I'll begin with our profitability.

We delivered consolidated net income of $18.2 million in the third quarter or $1.86 per diluted share, up 35% from $13.5 million or $1.38 per diluted share, reflecting the benefits of higher operating leverage on record revenue and disciplined execution across the business.

This is the highest quarterly earnings per share posted in the company's history, excluding the third quarter of 2018, which included a onetime $21 million noncash bargain purchase gain associated with the Ameron Water Group acquisition. The result demonstrates the earnings power of the business as record revenue translated into a 27.7% increase in operating income.

On the top line, consolidated net sales grew 18.7% to a record $179.4 million compared to $151.1 million in the third quarter of 2025. Our Water Transmission Systems segment also delivered record net sales of $131.9 million, an increase of 27% from $103.9 million.

This growth was driven by a 19% increase in selling price per ton due to changes in product mix and a 7% increase in tons produced resulting from project timing.

Precast net sales increased 0.6% to $47.5 million from $47.2 million. The results reflected a 3% increase in selling prices, primarily due to product mix, which was partially offset by a 4% decrease in volume shipped.

Third quarter results also included $2.1 million contribution from the recently acquired businesses, Boughton and Serpentix, which were not included in the year ago quarter.

As a reminder, the products we manufacture are unique and the average sales prices for both of our operating segments as well as the Precast shipment volumes and WTS production volumes cannot be relied upon as comparable metrics due to variations in product mix between periods.

We also achieved record consolidated gross profit of $38.2 million, up 18.8%. Consolidated gross margin remained consistent year-over-year at 21.3%. In Water Transmission Systems, gross profit increased 23.4% to a record $27.3 million or 20.7% of segment sales compared with $22.1 million or 21.3% of segment sales.

WTS gross margin declined 60 basis points year-over-year, reflecting a change in production mix between periods. Precast gross profit increased 8.6% to $10.9 million or 22.9% of segment sales compared with $10 million or 21.3% of segment sales.

The 160 basis point margin improvement primarily reflected stronger margin performance within the nonresidential portion of the business. Third quarter segment sales also included $0.4 million of gross profit from recently acquired businesses with no comparable contribution in the year ago quarter.

Selling, general and administrative expenses were $13.9 million, up 5.8% from $13.1 million and represented 7.7% of net sales, a 100 basis point improvement from 8.7% of net sales a year ago.

For the full year 2026, we now expect consolidated SG&A to range between $55 million and $56 million. Depreciation and amortization expense was $6.3 million compared to $5.2 million, and we now expect full year depreciation expense to be between $22 million and $23 million, which includes the amortization of acquired intangible assets obtained in the acquisition of Serpentix.

Interest expense declined to $0.4 million from $0.8 million, reflecting lower average daily borrowings. Income tax expense was $5.7 million, resulting in an effective income tax rate of 23.9% compared to $4.7 million or 26% last year.

The effective rate in the quarter was primarily impacted by nondeductible permanent differences, partially offset by return to provision adjustments. For the full year, we now expect an effective tax rate of approximately 23% to 24%.

I'll now turn to our financial condition. At September 30, 2026, cash and cash equivalents were $6.1 million, up from $2.3 million in December 31, 2025. Total debt was $27.7 million, including $18.5 million outstanding under the revolving line of credit.

At quarter end, we had approximately $105 million of additional borrowing capacity under our credit facility. Following the completion of the Serpentix acquisition in September, our balance sheet remains well positioned to support organic growth, disciplined M&A and capital returns to shareholders.

Strong profitability and effective working capital management drove net cash provided by operating activities of $27.4 million during the quarter compared to $21 million last year, bringing year-to-date operating cash flow to $71.1 million.

The year-over-year increase in quarter primarily reflected a $5.6 million increase in net income adjusted for noncash items. In addition, changes in working capital contributed $0.9 million to the increase, demonstrating strong working capital efficiency when considered with the 18.7% year-over-year increase in quarterly revenues.

During the quarter, we deployed capital across several key priorities, including $49.7 million to complete the acquisition of Serpentix, $7 million in capital expenditures and $1.2 million in share repurchases. These investments demonstrate our ability to fund growth while continuing to return capital to shareholders.

For the full year 2026, we now expect capital expenditures in the $21 million to $23 million range, including approximately $6 million for an investment in projects to support our Precast product spread strategy and broader growth initiatives.

Finally, we generated $20.4 million of free cash flow during the quarter compared to $13.2 million last year, bringing free cash flow for the first 9 months of 2026 to $56 million. We now expect free cash flow for the full year 2026 in the range of $62 million to $72 million.

To close, the third quarter marked another period of strong execution, highlighted by multiple company records, including consolidated revenue and gross profit, WTS revenue and gross profit and earnings per share. Our record Water Transmission Systems backlog, including confirmed orders, provides strong visibility where our solid cash generation and ample borrowing capacity preserve flexibility to invest in growth and return capital to shareholders.

Thank you to our employees for their continuing to prioritize safety and commercial and operational excellence and to our shareholders for their continued support.

I will now turn it over to the operator to begin the question-and-answer session.

Operator

[Operator Instructions] Our first question is from Julio Romero with Sidoti & Co.

分析師問答

Julio Romero

I wanted to start on the Precast segment. You mentioned quoting $33.5 million of data center projects and booking over $11 million year-to-date, I believe. Can you expand on that? And how much has shipped versus is in the order book? What the quoting pipeline looks like heading into '27 and how the margin profile of those data center projects and orders compares with the traditional precast work?

Scott Montross

Well, I'll say the margin profile on those is generally higher than what we see on normal precast orders. I think simply because of the speed at which they expect these things to be done, I mean shipment-wise, this is -- I'm going to guess in round numbers, we probably shipped about $7 million of that at this point in this year, but we have a bunch of it still in front of us that we're trying to turn in orders at this point, and there are some relatively large ones that are still going on.

So we have the expectations that as we get through the rest of this year, the quoting level is going to go up, the booking level is going to go up and the shipping levels are going to continue to follow that.

And again, this is something that's kind of an ancillary part of our business, and we're focused on the Precast business at both Park and Geneva. But we've been starting to get to be spec-ed in with some of these data center businesses on some of the products that we're providing.

And as long as we can continue to get those and take advantage of those items, I think we're going to continue to do that. And I think that it's no secret that the residential business has been down a little bit. And even when you look at the momentum index, the nonresidential business is only up slightly, and that's really institutionally-driven.

The commercial side is down about 3% year-over-year, I think, 12 months, but it'd be down a whole lot more if it wasn't for data centers.

So we're filling in the gaps with data centers orders. And the other thing I think that's happened that's a pretty good thing that the people have done at Geneva, generally the Geneva facilities have been about 85% residential business. This year, they're about 40% residential business, and the rest is being filled in by nonresidential business and data center orders.

So we're filling in the gaps with those based on what the environment is for Precast. Obviously, interest rates affect that, fuel costs affect that. But we've been able to pretty effectively fill things in with being able to pivot from one market segment, residential, nonresidential and the data centers to another. So it's worked out really well for our precast business.

Julio Romero

Excellent. Great color there. And then for my follow-up, I wanted to ask about Serpentix a bit. If you could speak to it a little bit and how it complements Boughton in Colorado, which I think is about 2 hours away, I believe, how it complements the broader Precast segment?

And then secondly, I believe based on the cash flow statement that you have roughly $50 million in cash used for that acquisition. So I was hoping you could also speak to maybe the margin profile and what it's expected to contribute. [Indiscernible].

Scott Montross

You've asked a few questions there, Julio. So you may have to remind me which ones you've asked. But the margin profile on that business is what I would say, significantly greater than what we see on the Precast side.

That business is a wastewater business that's a wastewater conveyance business. We already have a wastewater business at ParkUSA. And the majority of the wastewater business we have, ParkUSA, is directed toward really private applications like large grease traps and things of that nature. This is directed more toward the municipal side.

And at Park, we also have a business that's called Park Process that does dewatering, mixing, separation in the wastewater market, specifically in the biosolids and sludge section. And the Serpentix business having the conveyance piece and really a conveyor that is different than with a lot of the competitors because it's a vertical, horizontal and helical, so it's a big space saver. So that's one thing.

And really, the Serpentix business is directly adjacent to the Park Process business. So that kind of fits together and gives us greater access to more products in the wastewater side of the business. So we think it's going to be a pretty solid potential platform for growth going forward, and we're excited about it.

And I think the one thing that we're seeing in the wastewater side, especially in the sludge and biosolids, which is what we're focused on right now is the amount of potential targets out there for M&A are pretty substantial. And it kind of reminds me of the targets that we had when we first got into the Precast business, which are obviously has gotten to be quite a bit less.

But I think we're pretty excited about the ability to grow. We're excited about the margin profile with being as high as it is because it's quite a bit higher than what we see on the normal precast side. And I think it's a great opportunity for another platform to grow along the precast side of the business. So it's a pretty exciting acquisition.

Operator

Our next question is from Tomo Sano with JPMorgan.

Unknown Analyst

This is [ Ethan ] on for Tomo. To kind of start, the 0.8 TRIR, congrats on that. I believe if that holds out, that's like 6 or more years of decline annually. So congrats.

To go off of the previous comments a little bit, Geneva, you mentioned, was roughly 40% residential now, if I'm remembering correctly. Last quarter, you mentioned it was roughly 50/50. If you could talk a little bit more on kind of what you're seeing on both kind of the residential as well as the nonresidential business on an end market basis?

Scott Montross

Yes. I think the residential side, as we've talked about, is slower simply because of the interest rates. And as a result, we've continued to fill in our production schedules and our order book with nonresidential to replace that slowness.

So that's worked out very, very well for us. And we expect that to probably continue for a while, Ethan, especially with the interest rates being what they are. And the idea of is that when residential comes back, then ultimately, you'll be adding that on top of the growth that we've seen on the nonresidential side, ultimately getting to much larger shipping numbers than we've seen in the past out of the Geneva facilities. What was the other part of the question, Ethan?

Unknown Analyst

On the commercial side, what you're seeing, I believe, you mentioned negative 3% year-over-year right now year-to-date and excluding data centers, that's more where -- and I believe you also mentioned earlier in the call that you're seeing some pockets of softness. If you could clarify a little bit more.

Scott Montross

That's really on the residential side and nonresidential is seeing a little bit of pockets of softness on the commercial side. On the institutional side, the institutional side is actually up about 12% or 13% versus where it was last year.

So we've also started spinning into more institutional stuff like hospitals and schools. The amount of that stuff that we're doing right now has grown, replacing some of the softness that we've seen on the residential side.

Unknown Analyst

And then on the Precast side as well, you mentioned on the data centers, and you clarified on that side. When we're thinking about going into next year, you mentioned on product -- project sizes. How much larger could these project sizes be than kind of like the historical comping to maybe historical commercial or institutional side?

Scott Montross

On data center specifically?

Unknown Analyst

On data center specifically.

Scott Montross

I would say that a lot of data center bidding that we've done, we've seen projects that are $300,000, $400,000. But more recently, we've seen projects that are out there in front of us that we're working on trying to convert into orders and get the orders that are as big as $3 million and $5 million.

So as far as how large it could be in 2017 (sic) [ 2027 ], we're just working through our 2017 plan now. But as long as the data center business continues to drive forward, I think that it's a good indicator that it's going to continue to grow.

Right now, just in the state of Texas, there's 49 data centers that are under construction. And there's another 114 that are planned and 72 of those are in the preconstruction phase.

Obviously, there's been a little bit of slowdown with some -- with political issues related to those, but we're still seeing a lot of those in front of us and expect that with all of this stuff coming through that next year could be even larger than this year on the data center side of the business, adding to the total potential of our Precast revenue for the year.

Operator

Our next question is from Ted Jackson with Northland Securities. [Operator Instructions]

Edward Jackson

I'm going to say I have a box full of questions. I'm just going to ask a few of them and then get out of the queue. [Indiscernible]. I just wanted to end the call. I want to make sure I can come back [indiscernible].

All right. So I want to start out with the NDA opportunity. So when you announced that, it was a $50 million opportunity that was going to ship this quarter. You popped $39 million of revenue in the last 2 quarters. So if you were to finish it this quarter, that would say, let's call it, $11 million in the fourth quarter.

You clearly expected to get some revenue out of that and you're expecting to see some revenue in 2027. So I guess the question is it $50 million and some of that remaining $11 million is bleeding into '27? Or is it -- we should still see, call it, the $11 million, call it, $10 million, whatever you will, and the size of that opportunity may be scaled out a little?

Scott Montross

Yes, I would say that the total project value of the NDA project was right around $56 million. And so far, let's call it, $40 million we've done so far through the second and third quarter of the year.

In the fourth quarter, we expect to get some of that $16 million, but it's how fast that the contractor can actually take it. So some of that may bleed into the beginning of 2017 (sic) [ 2027 ].

So as far as what happens after that with the NDA projects, there's been rumors out there that there's additional ones that are out into the future, but we have not seen anything on any of that yet, and we're just focused on getting this one done and moving on and continuing to get more orders on the water transmission side.

Edward Jackson

Okay. Well, that was my follow-up question was any color on the opportunities in the future. They're still out there no movement, though.

Scott Montross

Yes. I think there's stuff that's out there. I think a lot of it's going to depend on the administration and what their stance on those things are. But I would say, even if you pull the data center work out, and look at where we are through the first 9 months of this year, like we're 10% or 12% ahead of where we were last year, which had no data center work -- or no, excuse me, NDA work in it.

And so it bodes well. And I think the bigger thing is when you look at what's going on in WTS, Ted, the momentum in that business is tremendous because coming through the third quarter, we converted about $144 million worth of work into backlog.

And the third quarter was the biggest bidding quarter of the year, but the second biggest bidding quarter of the year for Water Transmission is the fourth quarter. So the fourth quarter continues to be on a pretty breakneck pace for bidding on the Water Transmission side.

And I think I can safely say that I've never seen this much momentum on the Water Transmission System business. Heading through the first -- the fourth quarter and into next year, there's a tremendous amount of momentum in that business. So I mean, we're pretty excited about how that looks.

Edward Jackson

Would you -- with this NDA project, so let's just keep it at $50 million for the year for conversation sake. It was kind of a pig in the python for the year. But at the end of the day, you have these facilities that can produce and you have the huge backlog. And I know you're not giving '27 guidance.

But if you don't get a follow-on for NDA, I think most people are expecting to see a decline in WTS revenue just because of you have that gap. But is there the possibility that you would fill that revenue hole with the strong backlog you have and you can keep your WTS -- well, let's talk about it like on a volume basis, keep it at least flat in '27?

Scott Montross

Well, I mean, a lot of it's going to depend on how the bidding goes in the fourth quarter because we expect that to be relatively large in the fourth quarter. Some of it will have -- the steel pricing will have an impact on what those revenue numbers look like.

And again, as you said it, we're not giving guidance for what we're seeing in 2027. We are currently -- this week, I've met with both groups, the Water Transmission Systems group and the Precast group about expectations for the 2027 time frame.

And I would say that the bidding in 2027 is going to remain very strong. And we're going to carry an order book into 2027, where we have most of this stuff for 2027 already in backlog. And all we can do is continue to grow that potential with booking more orders.

So I'm not going to say that we're going to fill all this in at this point. But I think the strength of the business is going to be substantial as we go through 2027, and we're just going to have to see how the variables play out as we go through the year.

We're going to finish a very, very strong year just without the NDA project for Water Transmission Systems. But the question of whether we can fill that in, that's a tall order, not completely impossible, but we're just going to have to see how the variables play out. But 2027 is going to be from all views at this point in time, it looks like it's going to be another really strong year on the Water Transmission side.

Edward Jackson

I've got a question probably more for Aaron. I don't want to leave him out of all the fun. On the balance sheet, Aaron, you had a good jump up in contract liabilities and assets, which is a good thing because it just means you're getting prepaid for work and improves your free cash flow.

But as we think about that on a go-forward basis, at some point, it has to flip itself around, I would think. Can you talk a little bit about like how we should think about those line items as you kind of maybe march through really, really probably more '27 you get going with this. Just thinking about it really from a free cash flow perspective and how that should flow through over, I don't know, the next 12 or 18 months?

Aaron Wilkins

Yes, sure. I mean, if I'm going to be honest, we have prebilled the WTS business significantly better than we even expected to, and we had a pretty aggressive plan as we set the year. That is something that I do just kind of naturally think will kind of moderate a little bit.

I mean, we currently have a cash conversion cycle for that business that's around 99 days. To put in perspective, a year ago, for which I thought we were pretty strong on the prebills and really kind of driving those contract liabilities through, we were at 150 days.

So I don't think the 99 days is sustainable long term, but it will kind of depend on the types of projects that we have in front of us, who those are with and the size of the contracts that we see bidding in 2027.

But all in all, I think the thing that I'm, I think, proud of, regardless of whether we can kind of keep this pace, I feel like we have fundamentally changed the way that we think about cash flows for that business, and we have made extremely good progress on prioritizing that.

And so I don't think that sentiment is going to change at all. We still have that kind of now ingrained, I think, in that business that we talk about it every single week during staff meetings. And the commercial team is highly conscious of the fact that this is part of everybody's compensation as far as our incentive compensation package, and they are really driving that.

So I don't want to -- I'm certainly proud of the 99 days. I don't want to promise anything about that like that again. But I think it will be somewhere between the 150 and the 99 as we go forward.

Edward Jackson

So kind of taking all that and putting it in a base term, it's not like there's a pig in the python, we would expect to see that kind of reverse itself out. It might just trend down to something a little more sustainable.

Aaron Wilkins

I think so, yes. I think it just kind of moderates back a little bit, yes. But we're still focused on it. We're still trying to drive it. And like I say, they surprised me this year. So never would have thought we would have got here. They may surprise me again next year.

Edward Jackson

Well, I hope they do. I'm going to ask one more, then I'm going to -- I'm going to step aside after this next question, and it's a simple one. It's just kind of can you give me a sense with regards to the amount of steel that was in the COGS line item for this quarter?

Aaron Wilkins

For this quarter, I believe it was rated around 28%.

Edward Jackson

And I'm going to step back and see if anyone else has any questions. Then I have a couple more of that.

Operator

[Operator Instructions] Our next question is from Ted Jackson with Northland Securities.

Edward Jackson

Great. It's good to be back. So Scott, in the guidance, when you talk about Precast basically being steady in the fourth quarter, I don't have my model in front of me, but are you juxtaposing that against prior year or against third quarter?

Scott Montross

I think it's probably more against the third quarter is the way we're looking at it right now. It looks like it's pretty steady. I mean, there's fits and starts in the Precast business right now, Ted, because of interest rates and fuel costs and stuff like that.

But we continue to fill in with data center stuff, with moving from residential to nonresidential, and that's worked out pretty well. You never can tell what's going to happen because, obviously, there's a lot in the air with what the administration is doing and things that are going on.

But it still looks pretty strong to us, and it looks like it's going to be pretty strong into 2027, too. So I think we're in pretty good shape on the Precast side as we sit right now.

Edward Jackson

Okay. And then on the -- you said before that with the current quarter, you had some delayed shipments in the quarter that had affected the revenue number. So would we -- would those kind of -- I mean, those are delays, but not cancellations. So that's stuff that's kind of slipping into fourth quarter, maybe first quarter kind of thing?

Scott Montross

Right. I would say, Ted, the thing -- the statement I would make is that both with WTS and Precast, the fourth quarters are -- the fourth quarter is really validated by the orders that we have in hand right now for the first -- for the fourth quarter. It's not -- it's -- the orders are in hand.

I think what you get with some of the delays that we've seen in Precast with the interest rates and like I said, fuel charges and fuel costs, you get some -- a little bit of nervousness amongst the owners and the contractors that make them take pause for a bit of time, and then it just seems to come back. So yes, I think we're in pretty good shape.

Edward Jackson

And then my last question, it kind of ties into steel and backlog. I mean, the simple fact is that the price of steel is as we go forward in time, just continues to elevate. And I know that's good for revenue and profitability for you.

But when we think about the increases that you have had with WTS backlog, can you give us some kind of sense, I wouldn't expect you to be able to really take it down to the wire, but like how much of that is volume-based as opposed to price-based? But I assume that higher steel cost is helping you on the dollar value of that backlog too? That's my last question.

Scott Montross

It does help a little bit. But when we're dealing with -- we're looking at an average steel cost and backlog across all of 2026. Right? So steel has risen to a different level as we're going into the fourth quarter now.

We're at about $1,300 a ton as we go into the fourth quarter. But a lot of those projects that we bid were at lower steel prices. So I would also say that the volume in backlog is higher than normal, along with the project value because when you look at what's going on in the Water Transmission Systems business, our revenue per ton, if you will, is up about -- quarter-to-quarter, third quarter this year versus the third quarter of last year, the revenue is up 19% and the steel price is up 12%, okay?

So steel prices helped, but it's the revenue side and a lot of that's being driven by higher volumes. And the prices on these projects right now are pretty high.

So I mean, you really have to tear it down to its basic level. But we have really strong volume in backlog along with price. So -- and like I said, I think with that, we've got most of the stuff that we're going to be producing in 2027.

We've got a lot of it in backlog already. And we expect to have even more of it in backlog as we get through the fourth quarter. So I mean, it's a long way to answer the question, but it's -- our volume is up in backlog.

Edward Jackson

No, no, I think that was really good for me. So if I think about it, I just want to put some words in your mouth so you can spit them out if you don't like it. But you're saying that like -- so you book revenue earlier in the year that you haven't recognized revenue on.

And when you book that revenue, you're already locking in your steel prices. So inside of that backlog, let's just say, like if I was to go back to say you had stuff in there still that's left over from bookings in the first quarter, you could have had -- that stuff could have been at $1,000 a ton where stuff that you had in the third quarter is more like $1,200 a ton, I'm going with this. And hence, when I look at that, I need to understand. I just want to make sure.

Scott Montross

That's true.

Operator

We have reached the end of the question-and-answer session. I would like to turn the floor back over to Scott Montross for closing comments.

Scott Montross

Yes. Just a few comments before we wrap up today. Obviously, we had another very, very strong quarter, setting a lot of records, including revenue, gross profit, earnings per share. Water Transmission continues to be, what I would say, generating very strong momentum and that business right now is booming, and we're hitting booking levels in this year that we've never seen before.

And obviously, some of it is the NDA project, but a lot of it is just straight-line Water Transmission Systems business. So we have really good visibility into the future.

So -- and again, even without the NDA project, we would be -- through 9 months of this year, we'd be 10% or 12% ahead of where we were last year at the same time. So I think that, that's a big deal.

The other thing is, as I said before, we converted $144 million into our backlog into the third quarter and the fourth quarter is going to be another strong bidding quarter, the second biggest bidding quarter of the year, only second to the third quarter.

So we've got still strong bidding in front of us. I think the Precast business continues to deliver strong results even with various softness in various areas, up 160 basis points versus where we were last year with an increasing margin. So those things are all positive.

The data centers continue to add to the Precast business. And we've advanced our long-term strategy with the acquisition of Serpentix, which fits right alongside our Park Process business at ParkUSA.

So we're very excited about the opportunities for that. And looking ahead into the fourth quarter, we expect stronger performance in 2025 fourth quarter and stronger performance in the first quarter of 2026 despite some of the seasonal factors that we see with the 2 major holidays and always, always the weather-related things.

So we're very positive about finishing the 2026 year at an all-time record level and very excited about the amount of momentum that we're carrying into 2027. So we will see you again in February, we'll talk again in February or early March, whatever the next call is. I'd like to thank everybody for joining us and be well. Thank you.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.