NWPX Is Printing Records While the Market Prices the NDA Hangover

A record $435 million water-pipe backlog and a real data-center precast pivot are colliding with the stock's 35% drawdown and a 2027 revenue air pocket.

NWPX · Earnings Call · 2026-10-29

The disconnect is the story

NWPX Infrastructure just delivered the best quarter in its history: net sales rose 18.7% to a record $179.4 million, gross profit hit a record $38.2 million, and diluted EPS jumped 35% to $1.86. Water Transmission Systems revenue rose 27% to $131.9 million, and the segment backlog ended at a record $435 million, up from $301 million a year earlier. Yet the stock is down 31.7% over the last 90 trading days and 34.6% from its June 30 peak of $149.94. The market is not arguing with the quarter. It is already discounting the quarter after next.

Water pipe is booming — but that is not new

The WTS print is genuinely strong. Tons produced rose 7%, selling price per ton rose 19% on mix, and gross profit increased 23.4% to $27.3 million. Water Transmission Systems converted about $144 million of work into backlog during Q3, and management says Q4 is the second-biggest bidding quarter of the year. Scott Montross did not hide his enthusiasm: “I think I can safely say that I have never seen this much momentum on the Water Transmission Systems business heading through the fourth quarter and into next year.” — Scott Montross, President and CEO · 2026-10-29 The caveat is that this is an acceleration of an existing trend, not a new one. In the prior quarter he described bidding as “really, really strong” — Scott Montross, President and CEO · 2026-07-30, and even then expected 2026 bidding in the 150,000-ton range. The difference now is that the base WTS business, excluding the NDA job, is running about 10% to 12% ahead of last year over the first nine months.

The NDA project is the real debate

The stock's problem is not WTS demand; it is the NDA project and what happens when it ends. The project was a roughly $56 million job, of which about $40 million had been recognized through Q2 and Q3. Q3 alone included about $31 million of NDA revenue. The remaining ~$16 million is expected in Q4, but timing depends on the contractor and some could slip into early 2027. That is the air pocket analyst Ted Jackson pressed on: can the record core backlog fill the hole? Montross was candid: “the question of whether we can fill that in, that is a tall order, not completely impossible” — Scott Montross, President and CEO · 2026-10-29. He also said the company has most of what it will produce in 2027 already in backlog, which is reassuring—but it does not answer whether total WTS revenue can grow once the NDA job rolls off. This is where prior calls matter. In July, management expected backlog to normalize into the “low 300s to the mid-300s range” — Scott Montross, President and CEO · 2026-07-30 after the one-time project worked through. Instead, backlog is $435 million. That is a bullish data point on core bookings, but it also raises the bar: the market now wants proof that the $435 million can convert into 2027 revenue without the NDA kicker.

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. Some of that may bleed into the beginning of 2027.
Scott Montross, President and CEO · 2026-10-29

Precast's data-center pivot is real, but small

Precast revenue was $47.5 million, up only 0.6%, as volumes fell 4% and price/mix added 3%. Gross margin improved 160 basis points to 22.9%, which is impressive given the volume softness. The growth vector is data center work: through Q3 NWPX had quoted $33.5 million of data-center projects, booked more than $11 million, and shipped roughly $7 million. Project sizes are moving from $300,000–$400,000 to $3 million–$5 million, and the Geneva facilities have gone from about 85% residential to 40% residential as non-residential and data-center work fills the gap. Montross noted the margin profile on those orders is “generally higher than what we see on normal Precast orders” — Scott Montross, President and CEO · 2026-10-29. The catch is scale: data centers are still a small slice of a $47.5 million quarterly segment, and the global tape has cooled on the theme—AI data center exposure is down about 5% over the last 30 days in the market's thematic price basket. This is a real option, not yet a second leg. Management also flagged delayed shipments as customers paused amid rates and fuel costs; those are delays, not cancellations, but they explain why Precast revenue missed internal expectations.

Serpentix, cash, and steel

The quieter strategic move is the acquisition of Serpentix, a $49.7 million cash deal for a wastewater conveyor business with margins well above normal Precast. It sits beside Park Process and expands the municipal wastewater platform. Montross thinks the wastewater M&A pipeline is “pretty substantial” — Scott Montross, President and CEO · 2026-10-29—a rare comment from a management team that has complained about a dearth of Precast targets. Cash is supporting the strategy: Q3 free cash flow was $20.4 million, nine-month FCF reached $56 million, and full-year guidance is $62 million–$72 million. CFO Aaron Wilkins said the WTS team has “pre-billed the WTS business significantly better than we even expected to” — Aaron Wilkins, Chief Financial Officer · 2026-10-29, pulling the cash conversion cycle to about 99 days from 150 a year ago. The balance sheet is not stretched: debt was $27.7 million after Serpentix, with roughly $105 million of revolver capacity. At the last filed quarter, effective net cash was $9 million, and free cash flow less stock comp was $7 million in that quarter before the stronger Q3 print. Steel remains the swing factor: at about $1,300 a ton entering Q4, Steel price inflation lifts backlog dollars and revenue per ton, but it is largely a pass-through and was 28% of Q3 cost of goods sold.

Why the tape is skeptical

Even after the drawdown, this is not a cheap stock in a conventional sense. At the latest filed quarter, price-to-revenue was 2.5x, and gross margin was 21.5%, up 2.5 percentage points year over year. The market is treating 2026 as a peak earnings year and asking what the through-cycle number looks like. That is rational: the NDA project flattered Q3, Precast is still fighting residential softness, and the stock's own tape is a straight 17-week decline. The bull case is that core WTS bidding is stronger than ever, the $435 million backlog provides 2027 visibility, data-center orders are scaling, and Serpentix adds a higher-margin wastewater platform. The bear case is that all of that was known before the record print, and the stock still fell. The next catalyst is not another record quarter—it is Q4 bidding and the 2027 backlog conversion that proves the NDA cliff can be bridged. Until then, NWPX is a company executing better than its stock.