Northwest Pipe Company (NASDAQ: NWPX) today reported record revenue
and earnings for the year ended December 31, 2008. Revenue in the
year was $439.7 million compared to $382.8 million in 2007. Net
income for 2008 was $32.3 million, compared to $20.8 million in
2007. Diluted earnings per share were $3.46 for 2008 compared to
$2.26 per share in 2007.
For the fourth quarter of 2008, the Company reported $110.2
million in revenue, up from $98.2 million in the same period of the
prior year. Net income in the fourth quarter of 2008 was $8.6
million, or $0.92 per diluted share, compared to net income of $5.6
million or $0.60 per diluted share in the same quarter of 2007. The
Company reported backlog entering 2009 of approximately $190
million.
Water Transmission Results
Revenue for the Water Transmission Group was $271.9 million in
2008 compared to $287.8 million in 2007. Gross profit in 2008 was
$54.5 million, or 20.0% of sales, compared to $60.2 million, or
20.9% of sales in 2007.
Water Transmission revenue was $55.7 million in the fourth
quarter of 2008 compared to $80.3 million in the fourth quarter of
2007. Gross profit was $11.0 million, or 19.7% of sales, in 2008
compared to $17.0 million, or 21.2% of sales, in the same quarter
of 2007.
"Water Transmission revenue was down in the fourth quarter of
2008 for three reasons which were all previously disclosed," said
Brian W. Dunham, president and chief executive officer of the
Company. "First, and most importantly, a major project was
postponed so late that we had no opportunity to replace this
volume. Secondly, we shut down our highest volume production line
during the quarter to install a new spiral weld mill; and finally,
weather issues impacted production in all but two of our
facilities."
Tubular Products Results
The Tubular Products Group revenue was a record $167.8 million
in 2008, compared to $95.0 million in 2007. Gross profit in 2008
was $39.2 million, or 23.4% of sales, compared to $10.0 million, or
10.5% of sales for 2007.
Fourth quarter revenue was also at a record high for the Tubular
Products Group at $54.5 million, compared to $17.9 million in the
fourth quarter of last year. Gross profit in the fourth quarter of
2008 was $13.5 million, or 24.7% of sales, up from $1.0 million, or
5.5% of sales, in the fourth quarter of 2007.
"The record results in the Tubular Products Group for the year
were driven primarily by strong energy pipe sales with solid
performance in our other products as well," said Dunham. "Late in
the fourth quarter, bookings declined dramatically as the recession
deepened. However, through the end of the year, we continued to
ship orders that had been placed earlier in the year. Shipping out
of backlog kept our revenue at a high level throughout the fourth
quarter."
Outlook
"As we look ahead, we are focused on the impact of the recession
and financial issues on our markets," stated Dunham. "Clearly,
there is a strong correlation between our tubular products business
outlook and general economic factors, including natural gas
exploration, non-residential construction, agricultural spending,
and highway spending. At this time, we are expecting decreases in
all these areas. Our selling prices will also come down as our
markets adjust to lower raw material costs. These issues will
result in a pronounced impact in the first two quarters of 2009. We
expect to see improving market conditions and results in the second
half of the year."
"Our water transmission business doesn't necessarily move in
patterns consistent with the economic cycle. This market is driven
by large municipal projects that are planned and developed over the
course of several years and are primarily motivated by long term
population growth and migration projections," said Dunham. "Funding
is typically provided by the sale of revenue bonds that are backed
by connection fees or usage fees. While there have been short-term
delays in project timing, we have not seen significant delays or
cancellations due to funding issues on projects in our backlog or
projects we expect to bid in the near future."
"We are anticipating a stronger water transmission market in
2009," stated Dunham. "Due to the timing on specific projects,
weather delays and the installation of our new mill, the first
quarter is expected to be the slowest of the year."
The Company recently announced the formation of Northwest Pipe
Asia and the acquisition of Byard Ltd., an equipment manufacturer.
"While this will not provide much near term impact, it may
ultimately lead to additional international sales of products made
in the United States and, possibly, some further investment
overseas as well," said Dunham.
Northwest Pipe is continuing the process of reopening its
Bossier City, Louisiana facility. "The Louisiana facility will
produce pipe primarily for the natural gas exploration market, and
we expect it to be in production in July. However, given the
significant downturn in drilling activity and the glut of imported
product that has recently arrived, we will postpone completion of
the downstream manufacturing processes. We will be able to
participate in the market by shipping product to processors for
completion in the near term and will be able to quickly complete
the project when market conditions warrant the additional
investment," said Dunham.
Northwest Pipe also announced a temporary shut down of one
facility. "We have seven water transmission plants," said Dunham.
"At this time, we are temporarily closing our Pleasant Grove, Utah
facility. This facility and its people have performed well and have
been very successful for us, but we do not currently see sufficient
upcoming work located nearby to justify its operation. We are going
to maintain the equipment at this location and closely monitor the
project opportunities in and around Utah. We hope to be able to
start this up again."
"This is a challenging time," concluded Dunham. "We are
adjusting our strategies and managing our costs in order to work
through this period as effectively as possible while, at the same
time, staying poised to take advantage of improving conditions when
they come."
About Northwest Pipe Company
Northwest Pipe Company manufactures welded steel pipe and other
products in two 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 applications including construction,
agricultural, energy, traffic and other commercial and industrial
uses. The Company is headquartered in Vancouver, Washington and has
ten 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
expectations 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, domestic and international
economic conditions and financial markets 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 2008 earnings conference call will
be held on Wednesday, February 25, 2009, 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 Twelve Months Ended
December 31 December 31
------------------- -------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Net Sales:
Water Transmission $ 55,688 $ 80,299 $ 271,930 $ 287,805
Tubular Products 54,513 17,910 167,805 95,019
--------- --------- --------- ---------
Net Sales 110,201 98,209 439,735 382,824
Cost of Sales:
Water Transmission 44,707 63,265 217,457 227,598
Tubular Products 41,050 16,921 128,620 85,011
--------- --------- --------- ---------
Total Cost of Sales 85,757 80,186 346,077 312,609
Gross Profit:
Water Transmission 10,981 17,034 54,473 60,207
Tubular Products 13,463 989 39,185 10,008
--------- --------- --------- ---------
Gross Profit 24,444 18,023 93,658 70,215
Selling, General, and
Administrative 8,924 7,832 35,166 30,703
--------- --------- --------- ---------
Operating Income 15,520 10,191 58,492 39,512
Interest Expense, Net 1,942 1,701 6,409 6,792
--------- --------- --------- ---------
Income Before Income Taxes 13,578 8,490 52,083 32,720
Provision for Income Taxes 4,950 2,922 19,782 11,888
--------- --------- --------- ---------
Net Income $ 8,628 $ 5,568 $ 32,301 $ 20,832
========= ========= ========= =========
Basic Earnings per Share $ 0.94 $ 0.62 $ 3.53 $ 2.32
========= ========= ========= =========
Diluted Earnings per Share $ 0.92 $ 0.60 $ 3.46 $ 2.26
========= ========= ========= =========
Shares Used in Per Share
Calculation:
Basic 9,185 9,014 9,148 8,962
========= ========= ========= =========
Diluted 9,330 9,264 9,344 9,235
========= ========= ========= =========
NORTHWEST PIPE COMPANY
CONDENSED SELECTED BALANCE SHEET AND OTHER DATA (Unaudited)
(Dollar amounts in thousands)
December 31, December 31,
2008 2007
-------------- --------------
Assets:
Cash and Cash Equivalents $ 90 $ 234
Trade and Other Receivables, Net 75,923 49,300
Costs and Estimated Earnings in Excess
of Billings on Uncompleted Contracts 106,234 121,058
Inventories 87,348 62,805
Other Current Assets 12,436 10,487
-------------- --------------
Total Current Assets 282,031 243,884
Property and Equipment, Net 194,035 179,977
Other Assets 33,368 29,702
-------------- --------------
Total Assets $ 509,434 $ 453,563
============== ==============
Liabilities:
Current Maturities of Long-Term Debt $ 6,543 $ 5,851
Accounts Payable 34,109 41,684
Accrued Liabilities 10,111 12,311
Billings in Excess of Cost and Estimated
Earnings on Uncompleted Contracts 8,020 2,514
-------------- --------------
Total Current Liabilities 58,783 62,360
Long-Term Note Payable to Financial
Institution 82,065 54,415
Other Long-Term Debt, Less Current
Maturities 32,379 38,921
Other Liabilities 44,646 41,585
-------------- --------------
Total Liabilities 217,873 197,281
Stockholders' Equity 291,561 256,282
-------------- --------------
Total Liabilities and Stockholders'
Equity $ 509,434 $ 453,563
============== ==============
CONTACT: Brian Dunham Chief Executive Officer Or Stephanie Welty
Chief Financial Officer 360-397-6250
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