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spk05: Good morning and welcome to the Northwest Pipe Company's first quarter 2021 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask a question. To ask a question, you may press star, then one on your touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Scott Montross. Please go ahead.
spk00: Good morning and welcome to Northwest Pipe Company's first quarter 2021 earnings 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, May 3, 2021, at approximately 4 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 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 31st, 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 it 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 are 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 which 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 of 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 that 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 would 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 are 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 and lean manufacturing to drive further efficiencies. And as mentioned on our last call, we are 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 and line manhole systems, which we believe have significant organic growth potential, as recently announced, Geneva began manufacturing and distributing 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 leak and 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 will now turn to look at current and upcoming water transmission projects. In the Texas market, the ongoing multi-year, 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 both 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, early 2023. There is currently a bid package out 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 that has received 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 the Northwest Pipe. The bulk of the project is dependent upon 2021 legislative session to commit to full funding. We are closely tracking the outcome of further budget approval now in discussion at the State Legislative Assembly. In Colorado, we are tracking a 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 are 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 of 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 and the year will finish strong. Looking ahead, we will 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 will now turn the call over to Aaron, who will walk through our first quarter financial results in greater detail.
spk02: Thank you, Scott, and good morning, everyone. We 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 22 cents per diluted share compared to 0.6 million or six cents per diluted share in the first quarter of 2020. There were no adjustments to get 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 of Geneva results given that acquisition closed on January 31st 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 times are not always the best indicator of productivity and comparability of our metrics between periods are highly dependent on project timing and 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 was 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 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 in 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 the 26.5% we were expecting for the full year due to the combination of a windfall benefit on stock-based compensation that vested during the quarter, which was pronounced by a relatively low pre-tax 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 compared 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 31st, our total available equity 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 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 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 of Northwest Pike. I will now turn it over to the operator to begin the question and answer session.
spk05: We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two. Our first question today will come from Brent Thielman with DA Davidson.
spk01: Hey, good morning, Scott and Aaron. Hey, Brent. How are you?
spk03: Good. Thank you. Scott, you sound a bit more confident maybe about the slate of jobs you've been tracking starting to solidify in terms of schedules. 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 slow down? I'm just looking for anything else you could offer there.
spk00: Yeah, I think, Brent, like we talked about on the last call, the second half of 2020 was tough. we saw somewhere in the area of about $130 million worth of work slide out of the second half of 2020. And out of the first quarter of 2021, somewhere probably in the area of between $40 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 really slow down, and the jobs are starting to kind of gain attraction in a 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 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.
spk03: Okay, all right, appreciate that. The order book at Geneva sounds pretty encouraging. I guess any more context where that sits, maybe against just the time frame that you've owned it? Are any of these new products that you're introducing meaningful to that at this point, or is it still pretty early on?
spk00: I think when you look to answer 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 which obviously, as we've talked about, is always a slow quarter. As we've come out of that slow quarter, the order book has 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 when you look at the new products that are out there, the perfect pipe and the lined manhole. Unfortunately, the pandemic slowed us down a little bit with getting those started, so 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 liners to protect not only reinforced concrete pipe but liners to protect manholes and troughs in manholes against corrosive sewer application in hydrogen sulfide gas in 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 and municipalities going forward. We think that that product's got a lot of legs going forward and we're just starting to get started. You know, probably somewhere in the area of between, you know, 42% and 47% of our business is RCP and manhole products on the precast concrete side. And obviously, we'd like to line 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. Okay.
spk03: Understood. And I guess the other question was just, you know, whenever you get some inflation in the market, you know, I would think it gets some, you know, at least 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 rational in the market despite all these delays and given the movement and costs?
spk00: 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 starts to affect the margins for a little bit of a period of time. But as we've talked about, that certainly appears as it's 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 are starting to get a little bit more rational with that right now. And I would say that with steel, 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 change 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. what average steel pricing was in any publication at the end of the fourth quarter for the fourth quarter of 2020, it was like $7.82 for a hot roll ban. That's just an FOV the mill base hot roll ban. When you look at it at the end of the first quarter, it's about $1,200 a ton. And where we see it now is somewhere in the area of $1,400 a ton. So I think we're just starting to see the tip of the iceberg with what it's doing to pricing on projects as far as pushing the pricing up.
spk03: Okay. Just last one. Scott, I guess, you know, a lot in the news about infrastructure bill and, you know, a lot of different numbers thrown around that are big numbers. You know, anything you take from what you've seen so far that, you know, we can think about in the context of your business?
spk00: Yeah, 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 it sets aside about $35 billion for state revolving funds. And it's generally leaked into the state revolving funds somewhere about $2 to $3 billion a year. So that's been extended. I think it's 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. Tom Petrie- Part of that somewhere in the area of about 45 billion looks like it's try it's it's to remove lead pipes. Tom Petrie- From from the the portable water system so there's 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 questions, Scott.
spk03: Absolutely, Brett.
spk05: Our next question comes from Gus Richard with Northland.
spk01: Yeah, thanks for taking the question. Hi, guys. The environment's pretty dynamic. Things are kind of stacking up. Steel 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?
spk00: I think that, like we talked about in the calls, call, I think the second quarter remains pretty challenging. Gus, I think what you 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 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 market supply demand and delivery issues, probably the height of this is going to be the second quarter because, you know, one, we're in the middle of, you know, 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 reline that'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, you know, as I've said, we're starting to see the jobs delaying into the future, starting to diminish. So that starts to normalize. I think 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. 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 jobs continue to stack up like we see and the demand remains where we see it, we're going to go into an area of relatively strong demand. So if that happens and 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.
spk01: Got it. That's very helpful. And then just on the Texas market, you know, you've got a new competitor there. and I'm sure they need to sell their plant. Is the pricing pressure from that abated? It sounds like it is, but I just want to make sure.
spk00: I think what you're going to have when you get a new entry into the market, what you have is a situation where at least for a period of time, as 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. 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, 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 know the market. So certainly we think things normalized after several months or so with that going on as long as the demand continues to remain strong down there.
spk01: Got it. And then last one for me, you talked a little bit about continuing to work on manufacturing efficiencies, cost reductions, etc. Do you have any targets on what you can do in order to bring your cost structure down? You know, just any guidance there?
spk00: Yeah, what we try to do is target the man hours for specific jobs and the reduction in man hours or hours for specific job on an annual basis, measuring it from year to year. And, you know, we're normally targeting anywhere from about a percent to two percent on that on an annualized basis.
spk01: Got it.
spk00: That's very helpful. When you start looking at the lean manufacturing pieces and parts inefficiencies with lean, there's a whole other level of costs that we're looking at taking out. 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 plants. So cost reduction work never, ever stops. Got it.
spk01: Okay. All right. Very good. Thanks so much. That's it for me.
spk05: And again, if you have a question, please press star then one. Our next question comes from Mike Morales with Waldhausen and Company.
spk04: Hey, good morning, Scott and Aaron. Hope you're staying safe and well. Appreciate you taking the questions. Hey, Mike. Hey, 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 you know, all of these programs that didn't bid, um, and they weren't canceled, uh, are, you know, that bidding pressure is alleviating and potentially they're going to bid and enter production sometime here, uh, in the second half and that should help your utilization and margins go along, going along with it. Uh, is my timeline right? Uh, am I thinking about things the right way there?
spk00: I think what you see is the, the approximately 130 million Mike that pushed out of the second half of 2020 and, uh, $40 million to $50 million that pushed out of the first quarter, pushed out. And 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 you know, Mike, you've been around this for a while, too, how these projects can move around. We really can't 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 in 2022, too.
spk04: Sure, you know, and I hesitate to use this phrase that 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, you know, just from an earnings perspective, that seems like it could be a pretty compelling story over the next year or two, you know, 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 that high steel prices don't bother you guys, but volatile prices do. You know, 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?
spk00: No, we are constantly working on hiring people, especially people in the plants where labor is getting a little bit harder to get. We've actually put some full-time resources on that, Mike. 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 to be a constant focus to make sure that you're replacing or hiring people that you need for every one of the plants.
spk04: Right, 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, you know, strong bidding environment that you find yourselves in?
spk00: 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 will handle it.
spk04: Fantastic. Scott and Erin, I appreciate the color as always. Be well. Thank you. Thanks, Mike.
spk05: This concludes our question and answer session. I'd like to turn the call back over to Scott Montross for any closing remarks.
spk00: 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 have 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 and remains critical. I mean, the need is evident based on our backlog, which surpassed 200 million mark for the 11th consecutive quarter, 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 in our second quarter call in August. So thank you and be well.
spk05: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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