NWPX Infrastructure delivered a clean beat in the third quarter. Earnings were $1.86 per share against a $1.65 consensus estimate, a 12.7% surprise. Revenue of $179.39 million topped the $167.67 million estimate by 7.0%. Earnings grew 34.8% year over year on 18.7% revenue growth, and the sequential path is steep: revenue rose from $138.3 million in Q1 to $159.5 million in Q2 to $179.4 million now, while EPS climbed from $1.08 to $1.62 to $1.86. Management also raised full-year free cash flow guidance for the third time and guided Q4 above both Q4 2025 and Q1 2026 despite seasonal headwinds. The central tension is that nearly all of that momentum is coming from Water Transmission Systems, while Precast, the segment meant to diversify the story, stalled against its own Q2 outlook.
WTS carried the quarter. Segment sales jumped 27.0% to a record $131.9 million, driven by a 19% increase in selling price per ton from mix and a 7% gain in tons produced. About $31 million came from the NDA project alone. Gross profit rose 23.4%, but WTS margin slipped to 20.7%, down 60 basis points year over year and below Q2's 21.4%, which management attributed to product mix. Consolidated gross margin was flat at 21.3% and a touch below Q2's 21.5%. The earnings leverage therefore came from volume, modest SG&A growth, and roughly halved interest expense rather than from margin expansion. Operating income rose to $24.3 million from $19.0 million. The quality of the beat is solid, but the earnings growth is a volume story, not a pricing-power story.
The backlog picture needs careful reading. Signed WTS backlog fell to $264 million from $305 million in June. Backlog including confirmed orders, a non-GAAP measure that includes awarded but unsigned projects, rose to a record $435 million from $423 million, even after the NDA revenue burn. In Q2, management had expected backlog to normalize toward the low-to-mid $300 million range, so that outlook has effectively reversed. The CEO said he has "never seen this much momentum" in WTS. The NDA project was also resized to about $56 million from roughly $50 million, with about $16 million left for Q4 and early 2027.
Precast is where bears have legitimate ammunition. Sales rose just 0.6% to $47.5 million, and only because the Boughton and Serpentix acquisitions contributed $2.1 million. Legacy volume declined, though the sources disagree on the size: the release cites a 9% drop at legacy facilities, while call commentary referenced a 4% decline tied to customer shipment delays linked to interest rates, fuel costs and macro uncertainty. Either way, revenue fell short of internal expectations after Q2 had guided Precast higher. The headline order book rose to $67 million, but $10 million of that is Serpentix, and the legacy book slipped to $57 million from $61 million. The Q4 Precast outlook was downgraded to "steady." Margin did improve 160 basis points to 22.9% on mix. Data centers remain a real bright spot, with more than $11 million booked year to date and $33.5 million quoted, but they are not yet large enough to offset a cooling non-residential backdrop.
Cash flow strengthened sharply. Nine-month operating cash flow reached $70.7 million versus $31.3 million a year ago, and FY26 free cash flow guidance now stands at $62-72 million. However, contract liabilities swelled to $44.7 million from $8.8 million at year-end, and the CFO cautioned that prebilling-driven working capital gains will moderate. The roughly $49.7 million Serpentix deal also left cash at $6.1 million and the revolver drawn to $18.5 million. The bigger forward risk is 2027: management called replacing NDA revenue "a tall order," even as it expects base WTS bidding to exceed 2025.
The market has not been rewarding the operating momentum. Shares sit at $99.67, down 19.9% from the $124.42 open after the July report and about 1.6% below the 200-day moving average of $101.26. Investor sentiment, already negative, deteriorated further from -0.30 to -0.47, a meaningful shift that suggests investors came into the report focused on the NDA cliff and Precast softness rather than the record quarter. Price and AVWAP trend readings remain negative.
The bottom line is that NWPX delivered a genuinely strong quarter, with a sizable beat, a third free cash flow raise, record confirmed-order backlog and an above-seasonal Q4 outlook. However, the growth is concentrated in WTS, WTS margins are drifting lower on mix, legacy Precast is losing ground, and 2027 faces a difficult NDA comparison. With the stock down sharply since July and sentiment souring, the report gives skeptics less to argue about in the near term but does not resolve the question of what sustains growth once NDA rolls off.