Quarterly Highlights
Northwest Pipe Company (Nasdaq: NWPX), an industry leader of
engineered welded steel pipe products for the water transmission
market, announced today its financial results for the quarter ended
December 31, 2018. The Company will broadcast its fourth
quarter 2018 earnings conference call on Thursday, March 14,
2019 at 7:00 am PDT.
Outlook – “The increase in
bidding opportunities and selling prices that we began to see in
the second half of 2018 resulted in a year that ended with a record
backlog and the highest quarterly revenue and gross profit in
nearly four years,” said Scott Montross, President and CEO of the
Company. “We expect that the first quarter of 2019 will have
similar revenue and gross profit to the fourth quarter of 2018,
bucking the normal seasonal trend and a significant improvement
over the first quarters that we have experienced over the past
three years.”
Fourth Quarter 2018 ResultsNet
sales increased 61.5% to $57.5 million in the fourth quarter
of 2018 from $35.6 million in the fourth quarter of 2017. The
acquired Ameron operations contributed $19.1 million of the
increase in net sales in the fourth quarter of 2018. Excluding the
impact of the Ameron acquisition, the increase in net sales in the
fourth quarter of 2018 compared to the fourth quarter of 2017 of
$2.8 million was due to a 23% increase in selling price per
ton partially offset by a 12% decrease in tons produced. The
increase in selling price per ton was due to improved market
conditions and a change in product mix, combined with higher
material costs per ton. Higher material costs generally lead to
higher contract values and, therefore, higher net sales as
contractors and municipalities are aware of the input costs and
market conditions. The decrease in tons produced was attributed to
project timing.
Gross profit increased 270.0% to
$6.8 million (11.8% of net sales) in the fourth quarter of
2018 from $1.8 million (5.1% of net sales) in the fourth
quarter of 2017. The increase in gross profit in the fourth quarter
of 2018 compared to the fourth quarter of 2017 was primarily due to
improved pricing coupled with the addition of the Ameron
operations.
Net income from continuing operations was
$0.1 million, or $0.02 per diluted share, in the fourth
quarter of 2018 which included a $1.8 million measurement
period adjustment reducing the bargain purchase gain from the
acquisition of Ameron, $0.2 million of gain on sale of the
Monterrey, Mexico facility, $0.6 million of
acquisition-related costs, and $0.1 million of restructuring
expense. The fourth quarter of 2018 non-recurring items totaled
$2.4 million, net of taxes (based on the estimated taxes
specific to the non-recurring items). See the Company’s
Reconciliation of Non-GAAP Financial Measures below. The Company’s
effective income tax rate for the fourth quarter of 2018 was
impacted by the nontaxable bargain purchase gain adjustment as well
as the estimated changes in the Company’s valuation allowance. Net
loss from continuing operations in the fourth quarter of 2017 was
$1.8 million, or $0.20 per diluted share, which included a
$1.2 million charge for workers’ compensation. The fourth
quarter of 2017 non-recurring items totaled $0.7 million, net
of taxes.
Backlog represents the balance of remaining
performance obligations under signed contracts (“Backlog”). The
Company also has projects for which it has been notified that it is
the successful bidder, but a binding agreement has not been
executed (“Confirmed Orders”). Beginning in 2018, accounting
guidance requires disclosure of Backlog, which was $81 million
as of December 31, 2018 compared to $53 million as of
December 31, 2017. Backlog including Confirmed Orders, which
is the metric the Company has traditionally reported, was
$252 million as of December 31, 2018 compared to
$201 million as of September 30, 2018 and
$88 million as of December 31, 2017.
Full Year 2018 ResultsNet sales
increased 29.6% to $172.1 million in 2018 from
$132.8 million in 2017. The acquired Ameron operations
contributed $30.2 million of the increase in net sales in
2018. Excluding the impact of the Ameron acquisition, the increase
in net sales in 2018 compared to 2017 of $9.1 million was due
to a 6% increase in selling price per ton and a 1% increase in tons
produced. The increase in selling price per ton was due to improved
market conditions and a change in product mix, combined with higher
material costs per ton.
Gross profit increased 108.0% to
$12.1 million (7.0% of net sales) in 2018 from
$5.8 million (4.4% of net sales) in 2017. The increase in
gross profit in 2018 compared to 2017 was primarily due to improved
pricing coupled with the addition of the Ameron operations.
Net income from continuing operations was
$20.3 million, or $2.09 per diluted share, in 2018 which
included a $20.1 million bargain purchase gain from the
acquisition of Ameron, a $3.0 million gain on sale of the
Houston, Texas property and the Monterrey, Mexico facility,
$2.6 million of acquisition-related costs, and
$1.4 million of restructuring expense. The 2018 non-recurring
items totaled $22.1 million, net of taxes (based on the
estimated taxes specific to the non-recurring items). See the
Company’s Reconciliation of Non-GAAP Financial Measures below. The
Company’s effective income tax rate for 2018 was impacted by the
nontaxable bargain purchase gain as well as the estimated changes
in the Company’s valuation allowance and the tax windfall from
share-based compensation. Net loss from continuing operations in
2017 was $8.4 million, or $0.88 per diluted share, which
included a $1.2 million charge for worker’s compensation and
$0.9 million of restructuring expense. The 2017 non-recurring
items totaled $1.3 million, net of taxes.
Conference Call – The
Company will hold its fourth quarter 2018 earnings conference call
on Thursday, March 14, 2019 at 7:00 am PDT. 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 Friday,
April 12, 2019 by dialing 1-866-396-7645 passcode 6301.
About Northwest Pipe
Company – Founded in 1966, Northwest Pipe Company is
the largest manufacturer of engineered welded steel pipe water
systems in North America. The Company produces high-quality
engineered steel water pipe, bar-wrapped concrete cylinder pipe,
Permalok® steel casing, T-Lock® and Arrow-Lock® PVC liners, as well
as custom linings, coatings, joints, and one of the largest
offering of fittings and specialized components in North America.
Northwest Pipe Company provides solution-based products for a wide
range of markets including water transmission, water and wastewater
plant piping, trenchless technology, and piping rehabilitation.
Strategically positioned to meet growing water and wastewater
infrastructure needs, the Company is headquartered in Vancouver,
Washington, and has manufacturing facilities across North America.
Please visit www.nwpipe.com for more information.
Forward-Looking
Statements – Statements 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 the
Company’s 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 the Company include changes in demand and market
prices for its 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, changes in tariffs and duties imposed
on imports and exports and related impacts on the Company, the
Company’s ability to identify and complete internal initiatives
and/or acquisitions in order to grow its Water Transmission
business, the Company’s ability to effectively integrate
acquisitions into its business and operations and achieve
significant administrative and operational cost synergies, the
impacts of the Tax Cuts and Jobs Act of 2017, and other risks
discussed in the Company’s Annual Report on Form 10‑K for the year
ended December 31, 2018 and from time to time in its other
Securities and Exchange Commission filings and reports. Such
forward-looking statements speak only as of the date on which they
are made, and the Company does not undertake any obligation to
update any forward-looking statement to reflect events or
circumstances after the date of this release. If the Company does
update or correct one or more forward-looking statements, investors
and others should not conclude that it will make additional updates
or corrections with respect thereto or with respect to other
forward-looking statements.
Non-GAAP Financial
Measures – The Company is presenting Backlog
including Confirmed Orders, Adjusted income (loss) from continuing
operations, and Adjusted diluted income (loss) from continuing
operations per share. These non-GAAP financial measures are
provided to better enable investors and others to assess the
Company’s results and compare them with its competitors. These
should be considered as supplements to, and not as substitutes 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
December 31, |
|
Year Ended December
31, |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales |
$ |
57,544 |
|
|
$ |
35,627 |
|
|
$ |
172,149 |
|
|
$ |
132,780 |
|
Cost of sales |
|
50,761 |
|
|
|
33,794 |
|
|
|
160,053 |
|
|
|
126,965 |
|
Gross
profit |
|
6,783 |
|
|
|
1,833 |
|
|
|
12,096 |
|
|
|
5,815 |
|
Selling,
general, and administrative expense |
|
4,140 |
|
|
|
3,308 |
|
|
|
16,663 |
|
|
|
14,143 |
|
Gain on
sale of facilities |
|
(200 |
) |
|
|
- |
|
|
|
(2,960 |
) |
|
|
- |
|
Restructuring expense |
|
142 |
|
|
|
- |
|
|
|
1,364 |
|
|
|
881 |
|
Operating
income (loss) |
|
2,701 |
|
|
|
(1,475 |
) |
|
|
(2,971 |
) |
|
|
(9,209 |
) |
Bargain purchase gain
(adjustment) |
|
(1,800 |
) |
|
|
- |
|
|
|
20,080 |
|
|
|
- |
|
Other income |
|
18 |
|
|
|
255 |
|
|
|
267 |
|
|
|
201 |
|
Interest income |
|
11 |
|
|
|
6 |
|
|
|
267 |
|
|
|
6 |
|
Interest expense |
|
(198 |
) |
|
|
(121 |
) |
|
|
(583 |
) |
|
|
(490 |
) |
Income
(loss) from continuing operations |
|
|
|
|
|
|
|
|
|
|
|
before
income taxes |
|
732 |
|
|
|
(1,335 |
) |
|
|
17,060 |
|
|
|
(9,492 |
) |
Income tax expense
(benefit) |
|
584 |
|
|
|
507 |
|
|
|
(3,252 |
) |
|
|
(1,100 |
) |
Income
(loss) from continuing operations |
|
148 |
|
|
|
(1,842 |
) |
|
|
20,312 |
|
|
|
(8,392 |
) |
Loss on
discontinued operations |
|
- |
|
|
|
(316 |
) |
|
|
- |
|
|
|
(1,771 |
) |
Net income (loss) |
$ |
148 |
|
|
$ |
(2,158 |
) |
|
$ |
20,312 |
|
|
$ |
(10,163 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Basic income (loss) per
share: |
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
0.02 |
|
|
$ |
(0.20 |
) |
|
$ |
2.09 |
|
|
$ |
(0.88 |
) |
Discontinued operations |
|
- |
|
|
|
(0.03 |
) |
|
|
- |
|
|
|
(0.18 |
) |
Net
income (loss) per share |
$ |
0.02 |
|
|
$ |
(0.23 |
) |
|
$ |
2.09 |
|
|
$ |
(1.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss)
per share: |
|
|
|
|
|
|
|
|
|
|
|
Continuing operations |
$ |
0.02 |
|
|
$ |
(0.20 |
) |
|
$ |
2.09 |
|
|
$ |
(0.88 |
) |
Discontinued operations |
|
- |
|
|
|
(0.03 |
) |
|
|
- |
|
|
|
(0.18 |
) |
Net
income (loss) per share |
$ |
0.02 |
|
|
$ |
(0.23 |
) |
|
$ |
2.09 |
|
|
$ |
(1.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in per
share calculations: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
9,735 |
|
|
|
9,620 |
|
|
|
9,726 |
|
|
|
9,613 |
|
Diluted |
|
9,735 |
|
|
|
9,620 |
|
|
|
9,733 |
|
|
|
9,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NORTHWEST PIPE COMPANY |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
(In thousands) |
|
|
|
|
|
|
|
December 31, |
|
2018 |
|
2017 |
Assets |
|
|
|
|
|
Current
assets: |
|
|
|
|
|
Cash and
cash equivalents |
$ |
6,677 |
|
$ |
43,646 |
Trade and
other receivables, net |
|
34,394 |
|
|
28,990 |
Contract
assets |
|
74,271 |
|
|
44,502 |
Inventories |
|
39,376 |
|
|
17,055 |
Prepaid
expenses and other |
|
4,795 |
|
|
6,562 |
Total
current assets |
|
159,513 |
|
|
140,755 |
Property
and equipment, net |
|
103,447 |
|
|
78,756 |
Other
assets |
|
8,390 |
|
|
10,813 |
Total
assets |
$ |
271,350 |
|
$ |
230,324 |
|
|
|
|
|
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
Accounts
payable |
$ |
19,784 |
|
$ |
7,521 |
Accrued
liabilities |
|
7,547 |
|
|
6,563 |
Contract
liabilities |
|
3,745 |
|
|
2,599 |
Current
portion of capital lease obligations |
|
416 |
|
|
318 |
Total
current liabilities |
|
31,492 |
|
|
17,001 |
Borrowings on line of credit |
|
11,464 |
|
|
- |
Capital
lease obligations, less current portion |
|
839 |
|
|
737 |
Other
long-term liabilities |
|
8,965 |
|
|
12,322 |
Total
liabilities |
|
52,760 |
|
|
30,060 |
|
|
|
|
|
|
Stockholders' equity |
|
218,590 |
|
|
200,264 |
Total
liabilities and stockholders’ equity |
$ |
271,350 |
|
$ |
230,324 |
|
|
|
|
|
|
NORTHWEST PIPE COMPANY |
RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES |
(Unaudited) |
(In thousands, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Year Ended |
|
|
December 31, |
|
December 31, |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations, as reported |
$ |
148 |
|
|
$ |
(1,842 |
) |
|
$ |
20,312 |
|
|
$ |
(8,392 |
) |
Adjustments for non-recurring items: |
|
|
|
|
|
|
|
Bargain purchase (gain) adjustment |
|
1,800 |
|
|
|
- |
|
|
|
(20,080 |
) |
|
|
- |
|
Gain on sale of facilities |
|
(200 |
) |
|
|
- |
|
|
|
(2,960 |
) |
|
|
- |
|
Acquisition-related costs |
|
599 |
|
|
|
- |
|
|
|
2,616 |
|
|
|
- |
|
Restructuring expense |
|
142 |
|
|
|
- |
|
|
|
1,364 |
|
|
|
881 |
|
Worker's compensation reserve |
|
- |
|
|
|
1,185 |
|
|
|
- |
|
|
|
1,185 |
|
Estimated tax impact of non-recurring items |
|
95 |
|
|
|
(448 |
) |
|
|
(3,000 |
) |
|
|
(781 |
) |
Adjusted
income (loss) from continuing operations |
$ |
2,584 |
|
|
$ |
(1,105 |
) |
|
$ |
(1,748 |
) |
|
$ |
(7,107 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted income (loss) from continuing operations per share, as
reported |
$ |
0.02 |
|
|
$ |
(0.20 |
) |
|
$ |
2.09 |
|
|
$ |
(0.88 |
) |
|
|
|
|
|
|
|
|
|
Adjusted diluted income (loss) from continuing operations per
share |
$ |
0.27 |
|
|
$ |
(0.11 |
) |
|
$ |
(0.18 |
) |
|
$ |
(0.74 |
) |
|
|
|
|
|
|
|
|
|
Contact:
Robin Gantt
Chief Financial Officer
Northwest Pipe Company
360-397-6325 • rgantt@nwpipe.com
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