Northwest Pipe Company Reports Improved Fourth Quarter and the Full Year 2016 Results and Announces Conference Call
March 08 2017 - 5:44PM
Quarterly Highlights:
Northwest Pipe Company (Nasdaq:NWPX) today announced its financial
results for the quarter and year ended December 31, 2016. The
Company will broadcast its fourth quarter and full year 2016
earnings conference call on Thursday, March 9, 2017, at 7:00
am PST.
Because the Company is in the process of
exploring the sale of its remaining idle Tubular Products business,
the discussion below is focused on the Water Transmission segment.
The Company operated its Atchison, Kansas facility at reduced
levels from April 2015 to January 2016, at which time the facility
was idled to reduce operating expenses until market conditions
improve or a sale is completed. All remaining previously
manufactured tubular products inventory was sold by the second
quarter of 2016.
Fourth Quarter 2016 ResultsWater Transmission
sales increased 1.3% to $39.2 million in the fourth quarter of
2016 from $38.7 million in the fourth quarter of 2015. The
increase in net sales was the result of a 21% increase in average
selling prices due to an improved overall bidding environment for
water infrastructure projects, partially offset by a 17% reduction
in production volume. Water Transmission gross profit was
$3.8 million (9.6% of segment net sales) in the fourth quarter
of 2016 compared to a gross loss of $7.4 million (negative
19.2% of segment net sales) in the fourth quarter of 2015. Water
Transmission gross profit increased due to improved pricing.
Net income for the fourth quarter of 2016 was
$5.8 million or $0.60 per diluted share compared to a net loss
of $13.7 million or $1.43 per diluted share for the fourth
quarter of 2015. Net income includes the pre-tax gain on the sale
of the Denver facility of $7.9 million.
As of December 31, 2016, the backlog of
orders in the Water Transmission segment was $66 million. This
compared to a backlog of $116 million as of December 31,
2015 and $96 million as of September 30, 2016. The
Company’s backlog includes confirmed orders, including the balance
of projects in process, and projects for which we have been
notified as being the successful bidder even though a binding
agreement has not been executed.
Full Year 2016 ResultsWater
Transmission sales decreased 13.7% to $149.4 million in 2016
from $173.2 million in 2015. The decrease in net sales was due
to a 27% decrease in average selling price per ton offset in part
by a 19% increase in tons produced. The decrease in selling prices
per ton was due in part to a 15% decrease in steel costs per ton
coupled with increased competition and a change in product mix.
Water Transmission gross profit decreased to a $0.3 million
gross loss (negative 0.2% of segment net sales) in 2016 from
$0.6 million gross profit (0.3% of segment net sales) in 2015.
Water Transmission gross profit decreased in total and as a percent
of sales due to the significant competition that we have
experienced on our project bids, in combination with the mix of
products produced.
The 2016 net loss was $9.3 million or $0.97
per diluted share, compared to $29.4 million or $3.07 per
diluted share for 2015. Net income includes the pre-tax gain on the
sale of the Denver, Colorado facility of $7.9 million and
pre-tax restructuring expenses of $1.0 million. In 2015, net
income includes the pre-tax charge of $5.3 million associated
with the impairment of goodwill.
The Company generated $13.9 million in cash
from the sale of the Denver, Colorado facility in 2016 and did not
draw down on its line of credit at any point in the year.
Outlook“We have continued to see improvement in
the bidding environment in most of our regional markets. However,
one of our major markets has been much slower to show improvement.
As a result, first quarter revenues and margins will be lower
versus the fourth quarter,” said Scott Montross, President and
Chief Executive Officer of the Company. “Our focus on margin over
volume as well as the closure of the Denver facility will result in
backlog levels that are leaner than we have seen traditionally.
However, the overall booked margins on projects awarded later in
2016 and to this point in 2017 are significantly improved from a
year ago. Despite a weaker first quarter; we expect improved
bidding volumes for the full year 2017. We also expect that the new
administration’s focus on infrastructure spending will present
substantial near and longer term opportunities.”
Conference CallThe Company will hold its 2016
earnings conference call at 7:00 am PST on Thursday,
March 9, 2017. To listen to the live call, visit the Northwest
Pipe Company website, www.nwpipe.com, under Investor Relations. For
those unable to listen to the live call, the replay will be
available approximately one hour after the event and will remain
available until Monday, April 3, 2017 by dialing
1-888-562-6104 passcode 6301.
About Northwest Pipe CompanyNorthwest Pipe
Company is the largest manufacturer of engineered steel pipe water
systems in North America. With the Company’s strategically located
Water Transmission manufacturing facilities, it is well-positioned
to meet North America's growing needs for water and wastewater
infrastructure. The Company serves a wide range of markets and
their solutions-based products are a good fit for applications
including water transmission, plant piping, tunnels and river
crossings. The Company is headquartered in Vancouver, Washington
and has manufacturing facilities across the United States and one
manufacturing facility in Mexico.
Forward-Looking StatementsStatements in this
press release by Scott Montross are "forward-looking" statements
within the meaning of the Private Securities Litigation Reform Act
of 1995 and Section 21E of the Securities Exchange Act of
1934, as amended that are based on current expectations, estimates
and projections about our business, management’s beliefs and
assumptions made by management. These statements are not guarantees
of future performance and involve risks and uncertainties that are
difficult to predict. Therefore, actual outcomes and results may
differ materially from what is expressed or forecasted in such
forward-looking statements as a result of a variety of important
factors. While it is impossible to identify all such factors, those
that could cause actual results to differ materially from those
estimated by us include changes in demand and market prices for our
products, product mix, bidding activity, the timing of customer
orders and deliveries, production schedules, the price and
availability of raw materials, price and volume of imported
product, excess or shortage of production capacity, international
trade policy and regulations, the results of our exploration of the
sale of our remaining energy tubular products business, including
our ability to identify and complete any transactions or other
actions as a result of such efforts, our ability to identify and
complete internal initiatives and/or acquisitions in order to grow
our Water Transmission business and other risks discussed in our
Annual Report on Form 10‑K for the year ended
December 31, 2016 and from time to time in our other
Securities and Exchange Commission filings and reports. Such
forward-looking statements speak only as of the date on which they
are made, and we do not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after
the date of this release. If we do update or correct one or more
forward-looking statements, investors and others should not
conclude that we will make additional updates or corrections with
respect thereto or with respect to other forward-looking
statements.
Non-GAAP Financial MeasuresThe Company is
presenting backlog as well as certain expenses net of tax. These
non-GAAP measures are provided to better enable investors and
others to assess our results and compare them with our competitors.
These should be considered as a supplement to, and not as a
substitute for, or superior to, financial measures calculated in
accordance with GAAP.
For more information, visit www.nwpipe.com.
|
NORTHWEST PIPE COMPANY |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (Unaudited) |
(In thousands, except per share
amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Full Year Ended |
|
|
|
|
December 31, |
|
December 31, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales: |
|
|
|
|
|
|
|
|
|
|
Water transmission |
|
$ |
39,179 |
|
|
$ |
38,681 |
|
|
$ |
149,387 |
|
|
$ |
173,160 |
|
Tubular products |
|
|
|
- |
|
|
|
6,881 |
|
|
|
6,869 |
|
|
|
63,448 |
|
Total net sales |
|
|
|
39,179 |
|
|
|
45,562 |
|
|
|
156,256 |
|
|
|
236,608 |
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales: |
|
|
|
|
|
|
|
|
|
Water transmission |
|
|
35,412 |
|
|
|
46,124 |
|
|
|
149,704 |
|
|
|
172,554 |
|
Tubular products |
|
|
|
1,516 |
|
|
|
10,850 |
|
|
|
9,777 |
|
|
|
76,679 |
|
Total cost of sales |
|
|
36,928 |
|
|
|
56,974 |
|
|
|
159,481 |
|
|
|
249,233 |
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss): |
|
|
|
|
|
|
|
|
|
Water transmission |
|
|
3,767 |
|
|
|
(7,443 |
) |
|
|
(317 |
) |
|
|
606 |
|
Tubular products |
|
|
|
(1,516 |
) |
|
|
(3,969 |
) |
|
|
(2,908 |
) |
|
|
(13,231 |
) |
Total gross profit (loss) |
|
|
2,251 |
|
|
|
(11,412 |
) |
|
|
(3,225 |
) |
|
|
(12,625 |
) |
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expense |
|
4,583 |
|
|
|
5,104 |
|
|
|
17,178 |
|
|
|
22,303 |
|
Impairment of water transmission goodwill |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
5,282 |
|
Gain on sale of facility |
|
|
(7,860 |
) |
|
|
- |
|
|
|
(7,860 |
) |
|
|
- |
|
Restructuring expenses |
|
|
709 |
|
|
|
- |
|
|
|
990 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) |
|
|
|
|
|
|
|
|
Water transmission |
|
|
9,590 |
|
|
|
(9,026 |
) |
|
|
1,049 |
|
|
|
(11,592 |
) |
Tubular products |
|
|
|
(1,636 |
) |
|
|
(4,530 |
) |
|
|
(3,336 |
) |
|
|
(15,699 |
) |
Corporate |
|
|
|
(3,135 |
) |
|
|
(2,960 |
) |
|
|
(11,246 |
) |
|
|
(12,919 |
) |
Operating income (loss) |
|
|
4,819 |
|
|
|
(16,516 |
) |
|
|
(13,533 |
) |
|
|
(40,210 |
) |
|
|
|
|
|
|
|
|
|
|
|
Other income (expense) |
|
|
(28 |
) |
|
|
6 |
|
|
|
23 |
|
|
|
88 |
|
Interest income |
|
|
|
- |
|
|
|
- |
|
|
|
14 |
|
|
|
173 |
|
Interest expense |
|
|
|
(152 |
) |
|
|
(492 |
) |
|
|
(523 |
) |
|
|
(1,390 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
|
4,639 |
|
|
|
(17,002 |
) |
|
|
(14,019 |
) |
|
|
(41,339 |
) |
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
|
(1,195 |
) |
|
|
(3,309 |
) |
|
|
(4,756 |
) |
|
|
(11,951 |
) |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
|
$ |
5,834 |
|
|
$ |
(13,693 |
) |
|
$ |
(9,263 |
) |
|
$ |
(29,388 |
) |
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per share |
|
$ |
0.61 |
|
|
$ |
(1.43 |
) |
|
$ |
(0.97 |
) |
|
$ |
(3.07 |
) |
Diluted income (loss) per share |
|
$ |
0.60 |
|
|
$ |
(1.43 |
) |
|
$ |
(0.97 |
) |
|
$ |
(3.07 |
) |
|
|
|
|
|
|
|
|
|
|
|
Shares used in per share calculations |
|
|
|
|
|
|
|
|
Basic |
|
|
|
|
9,601 |
|
|
|
9,565 |
|
|
|
9,588 |
|
|
|
9,560 |
|
Diluted |
|
|
|
|
9,680 |
|
|
|
9,565 |
|
|
|
9,588 |
|
|
|
9,560 |
|
|
|
|
|
|
|
|
|
|
|
|
NORTHWEST PIPE COMPANY |
|
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) |
|
(In thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, |
|
December
31, |
|
|
|
2016 |
|
|
2015 |
|
Assets: |
|
|
|
|
Cash and
cash equivalents |
$ |
21,829 |
|
$ |
10,309 |
|
Trade and
other receivables, net |
|
25,555 |
|
|
27,567 |
|
Costs and
estimated earnings in excess |
|
|
|
|
of
billings on uncompleted contracts |
|
43,663 |
|
|
42,592 |
|
Inventories |
|
19,037 |
|
|
29,475 |
|
Other
current assets |
|
2,096 |
|
|
5,336 |
|
Total
current assets |
|
112,180 |
|
|
115,279 |
|
Property
and equipment, net |
|
118,101 |
|
|
131,848 |
|
Other
assets |
|
11,274 |
|
|
12,253 |
|
Total
assets |
$ |
241,555 |
|
$ |
259,380 |
|
|
|
|
|
|
Liabilities: |
|
|
|
|
Current
portion of capital lease obligations |
$ |
325 |
|
$ |
340 |
|
Accounts
payable |
|
5,267 |
|
|
4,739 |
|
Accrued
liabilities |
|
10,925 |
|
|
15,971 |
|
Billings
in excess of costs and estimated earnings |
|
|
|
|
on
uncompleted contracts |
|
2,038 |
|
|
520 |
|
Total
current liabilities |
|
18,555 |
|
|
21,570 |
|
Capital
lease obligations, less current portion |
|
602 |
|
|
718 |
|
Other
long-term liabilities |
|
13,185 |
|
|
19,532 |
|
Total
liabilities |
|
32,342 |
|
|
41,820 |
|
|
|
|
|
|
Stockholders' equity |
|
209,213 |
|
|
217,560 |
|
Total
liabilities and stockholders' equity |
$ |
241,555 |
|
$ |
259,380 |
|
|
|
|
|
|
Contact:
Robin Gantt
Senior Vice President, Chief Financial Officer and Corporate Secretary
(360) 397-6325
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