PORTLAND, OR today reported the highest annual sales and
earnings in its history. Sales for the year ended December 31, 2007
were $382.8 million compared to $346.6 million in 2006. Net income
was $20.8 million, compared to $20.0 million in 2006. The 2006
results included a non-recurring gain on sale of approximately $7.7
million.
For the fourth quarter, the Company reported sales of $98.2
million compared to $97.5 million for the fourth quarter of 2006.
Fourth quarter net income was $5.6 million, or $0.60 per diluted
share, slightly lower than the $6.0 million recorded for the same
quarter last year.
Water Transmission
Sales in the Water Transmission Group for 2007 were $274.8
million compared to $244.8 million for 2006. Gross profit for 2007
was $60.6 million, or 22.0% of sales, compared to $46.6 million, or
19.0% of sales in 2006.
For the fourth quarter, sales were $76.8 million, and gross
profit was $17.4 million, or 22.7% of sales. This is the highest
volume ever for this group and the highest gross profit margin
reported for a quarter since 2003. "The Water Transmission Group's
performance was outstanding during the quarter," said Brian W.
Dunham, president and chief executive officer of the Company. "The
higher margin reflects that performance, some incremental
improvements in the market, and a positive product mix. While this
margin performance won't necessarily repeat every quarter, we do
believe it is indicative of real improvements in our markets and
our facilities."
Tubular Products
The Tubular Products Group's 2007 sales were $95.0 million,
compared to $84.8 million in 2006. Gross profit was $10.0 million,
or 10.5% of sales, compared to $8.9 million, or 10.5% of sales for
2006.
Sales were $17.9 million and gross profit was $1.0 million in
the fourth quarter of 2007. "Although we met our objectives for the
year, the fourth quarter for this Group was disappointing," said
Dunham. "Volume was down as we changed our direction in the energy
market and we were significantly impacted by adverse weather in the
Midwest. We do expect to see rapid improvement and margin should be
back in the low double digit range in the first quarter of
2008."
Fabricated Products
Sales in the Fabricated Products Group were $13.0 million for
the year and $3.5 million in the fourth quarter. The Group lost
$400,000 in the fourth quarter and ended the year with a loss of
$350,000. The Company plans to include this business in the Water
Transmission Group beginning in the first quarter of 2008. This
reflects the internal management structure and strategic direction
for this Group.
Outlook
The Company's backlog is at an all time high at $212 million and
the market continues to look very active in 2008. Consequently, the
Company expects to improve upon 2007's results in both sales and
earnings over the course of the year. At this time, given the
timing of projected market activity, the second half of the year
should be significantly better than the first half and the second
quarter should be stronger than the first quarter. "While we expect
solid performance in the first quarter, we do not expect to match
the earnings we are reporting today in the Water Transmission
Group, which were based on historically high volume and a strong
product mix," said Dunham.
"We expect a quick return to better margins and volume in the
Tubular Products Group in the first quarter," continued Dunham. "In
spite of concerns about a slower overall economy, we see growth
opportunities in non-residential construction products, energy
products, and traffic signpost products in 2008."
Over the past few months there has been a rapid increase in the
cost of steel, the Company's primary raw material. "Steel price
increases cause different challenges in our two main groups," said
Dunham. "In Tubular Products, the challenge is to pass on these
increases to customers. At this time, prices for our products are
going up and we believe the market dynamics are strong enough to
absorb expected increases. In the Water Transmission Group, the
risk is that we might underestimate the cost of steel in fixed
price contracts. While this is possible, we do not see significant
exposure at this time."
"Steel availability is an issue for both groups. In the first
quarter of 2008, our overall revenues in Water Transmission will be
somewhat lower because delivery lead times have increased. We
believe this is only a near term timing problem. In general, for
both groups, we believe we have adequate supply of steel to meet
our needs, but we are watching this situation carefully," concluded
Dunham.
About Northwest Pipe Company
Northwest Pipe Company manufactures welded steel pipe and other
products in three business groups. Its Water Transmission Group is
the leading supplier of large diameter, high-pressure steel pipe
products that are used primarily for water infrastructure in North
America. Its Tubular Products Group manufactures smaller diameter
steel pipe for a wide range of construction, agricultural, energy,
industrial, and mechanical applications. Its Fabricated Products
Group manufactures propane tanks, water transmission fittings, and
other fabricated products. The Company is headquartered in
Portland, Oregon, and has nine manufacturing facilities across the
United States and Mexico.
Forward-Looking Statements
Statements in this press release by Brian Dunham and statements
in the "Outlook" section of this press release are
"forward-looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Words such as expects,
anticipates, intends, plans, believes, sees, estimates and
variations of such words and similar expressions are intended to
identify such forward-looking statements. Such statements reflect
management's current views and estimates of future economic and
market circumstances, industry conditions, Company performance and
financial results. Actual results could vary materially from the
description contained herein due to many factors, including project
delays, changes in bidding activity, market demand, operating
efficiencies, availability and price of raw materials, availability
and market acceptance of new products, product pricing, competitive
environment, and other risks described from time to time in the
Company's reports to the Securities and Exchange Commission. The
forward-looking statements we make today speak only as of today and
we do not undertake any obligation to update any such statements to
reflect events or circumstances occurring after today.
Conference Call
The Company's fourth quarter 2007 earnings conference call will
be held on Wednesday, March 5, 2008, at 8:00 a.m. PST via live
Internet webcast. The conference broadcast can be accessed at the
"Investor Relations" section of the Company's website located at
http://www.nwpipe.com. For those unable to listen to the live
broadcast, a replay will be available at the Investor Relations
section of the Company's website (www.nwpipe.com) or by dialing
800-925-5456 approximately one hour after the event.
NORTHWEST PIPE COMPANY
CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
(Dollar and share amounts in thousands, except per share amounts)
Three Months Ended For the Year Ended
December 31 December 31
-------------------- --------------------
2007 2006 2007 2006
--------- ---------- --------- ---------
Net Sales:
Water Transmission $ 76,840 $ 72,039 $ 274,760 $ 244,810
Tubular Products 17,910 20,991 95,019 84,756
Fabricated Products 3,459 4,469 13,045 17,025
--------- ---------- --------- ---------
Net Sales 98,209 97,499 382,824 346,591
Cost of Sales:
Water Transmission 59,402 58,152 214,196 198,209
Tubular Products 16,921 18,863 85,011 75,824
Fabricated Products 3,863 4,249 13,402 15,845
--------- ---------- --------- ---------
Total Cost of Sales 80,186 81,264 312,609 289,878
Gross Profit:
Water Transmission 17,438 13,887 60,564 46,601
Tubular Products 989 2,128 10,008 8,932
Fabricated Products (404) 220 (357) 1,180
--------- ---------- --------- ---------
Gross Profit 18,023 16,235 70,215 56,713
Selling, General and
Administrative 7,832 7,087 30,703 27,385
Gain on Sale of Asset - - - (7,674)
--------- ---------- --------- ---------
Operating Income 10,191 9,148 39,512 37,002
Interest Expense, net 1,701 1,380 6,792 6,700
--------- ---------- --------- ---------
Income Before Income Taxes 8,490 7,768 32,720 30,302
Provision for Income Taxes 2,922 1,789 11,888 10,283
--------- ---------- --------- ---------
Net Income $ 5,568 $ 5,979 $ 20,832 $ 20,019
========= ========== ========= =========
Basic Earnings per Share $ 0.62 $ 0.74 $ 2.32 $ 2.80
========= ========== ========= =========
Diluted Earnings per Share $ 0.60 $ 0.72 $ 2.26 $ 2.69
========= ========== ========= =========
Shares Used in Per Share
Calculation:
Basic 9,014 8,035 8,962 7,152
========= ========== ========= =========
Diluted 9,264 8,349 9,235 7,446
========= ========== ========= =========
CONDENSED SELECTED BALANCE SHEET AND OTHER DATA (Unaudited)
(Dollar amounts in thousands)
December December
31, 31,
2007 2006
--------- ---------
Assets:
Cash and Cash Equivalents $ 234 $ 4,259
Trade and Other Receivables, Net 49,300 68,425
Cost and Estimated Earnings in Excess
of Billings on Uncompleted Contracts 121,058 74,353
Inventories 62,805 79,300
Other Current Assets 10,487 11,177
--------- ---------
Total Current Assets 243,884 237,514
Property and Equipment, Net 179,977 160,776
Other Assets 29,702 26,161
--------- ---------
Total Assets $ 453,563 $ 424,451
========= =========
Liabilities:
Current Maturities of Long-Term Debt $ 5,851 $ 9,663
Accounts Payable 41,684 50,865
Accrued Liabilities 12,311 10,243
Billings in Excess of Cost and Estimated Earnings
on Uncompleted Contracts 2,514 -
--------- ---------
Total Current Liabilities 62,360 70,771
Long-Term Note Payable to Financial Institution 54,415 43,000
Other Long-Term Debt, Less Current Maturities 34,929 47,915
Other Liabilities 45,577 31,939
--------- ---------
Total Liabilities 197,281 193,625
Stockholders? Equity 256,282 230,826
--------- ---------
Total Liabilities and Stockholders? Equity $ 453,563 $ 424,451
========= =========
Other Data:
Working Capital $ 181,524 $ 166,743
Capital Expenditures 22,971 58,428
Depreciation and Amortization 4,864 3,782
Debt as a Percent of Capitalization 27.1% 29.5%
CONTACT: Brian Dunham Chief Executive Officer 503-382-2332
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