VANCOUVER, Wash., March 3, 2021 /PRNewswire/ -- Northwest Pipe
Company (NASDAQ: NWPX), an industry leader of engineered pipeline
systems for water infrastructure, today announced its financial
results for the fourth quarter and full year ended
December 31, 2020. The Company will broadcast its fourth
quarter and full year 2020 earnings conference call on Thursday,
March 4, 2021 at 7:00 a.m. PT.
Fourth Quarter 2020 Results
Net sales decreased 4.0% to $69.4 million in the fourth quarter of 2020
from $72.2 million in the fourth
quarter of 2019 due to a decline in legacy steel pipe sales as a
result of a 31% decrease in production volumes associated with
project timing. This was partially offset by a 17% increase in
selling price per ton, in addition to an $11.3 million contribution from the
Company's acquired Geneva Pipe and
Precast Company ("Geneva") operations.
Gross profit decreased 26.9% to $12.4 million, or 17.8% of net sales, in the
fourth quarter of 2020 from $16.9 million, or 23.4% of net sales, in the
fourth quarter of 2019, primarily due to lower production volume at
legacy steel pipe facilities, which was partially offset by the
margin contribution from Geneva. Gross profit in the fourth quarter
of 2019 included $1.4 million of
business interruption insurance recovery related to the fire at the
Company's Saginaw, Texas facility
in April 2019.
Net income was $5.2 million,
or $0.53 per diluted share, in the
fourth quarter of 2020 compared to $12.0 million, or $1.22 per diluted share, in the fourth quarter of
2019. The fourth quarter of 2020 included $0.5 million of pre-tax amortization
expenses from acquired intangibles, whereas the fourth quarter of
2019 included $2.6 million of
pre-tax net insurance recoveries and gains resulting from the
Saginaw fire. After considering
non-recurring items, adjusted net income was $5.6 million, or $0.57 per diluted share, in the fourth quarter of
2020, compared to $10.2 million,
or $1.04 per diluted share, in the
fourth quarter of 2019. See the Company's "Reconciliation of
Non-GAAP Financial Measures" in the table below.
Backlog represents the balance of remaining performance
obligations under signed contracts for water infrastructure steel
pipe products for which revenue is recognized over time. Backlog
was approximately $167 million as of December 31,
2020 compared to $143 million as of September 30, 2020
and $199 million as of December 31, 2019. 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"). Backlog including confirmed orders was
$221 million as of December 31, 2020 compared to
$231 million as of September 30, 2020 and
$258 million as of December 31, 2019.
Full Year 2020 Results
Net sales increased 2.4% to $285.9 million in 2020 from $279.3 million in 2019 as the $44.2 million contribution from the acquired
Geneva operations was nearly entirely offset by decreased sales in
the legacy steel pipe business. Sales of steel pipe declined due to
a 28% reduction in production volume, which was partially offset by
a 20% increase in selling prices. Additionally, the
pandemic-related shut-down of the Company's San Luis Río
Colorado, Mexico facility negatively impacted sales in
the second quarter of 2020.
Gross profit increased 7.1% to $50.5 million, or 17.7% of net sales, in
2020 from $47.2 million, or
16.9% of net sales in 2019. The increase in gross profit was due to
the margin contribution from Geneva and improved product pricing in
the Company's legacy steel pipe business, partially offset by lower
production volume for steel pipe and amortization and other
acquisition-related accounting adjustments resulting from the
purchase accounting for Geneva. In addition, as a result of the
fire at the Company's Saginaw
facility, $1.4 million of
business interruption insurance recovery was recorded in 2020,
compared to $1.6 million of
incremental production costs in 2019.
Net income was $19.1 million,
or $1.93 per diluted share, in 2020
compared to $27.9 million, or
$2.85 per diluted share, in 2019. Net
income in 2020 included increased selling, general, and
administrative expenses of $6.5 million primarily due to the addition
of Geneva and higher compensation-related expense. Net income in
2020 included $2.6 million of
pre-tax acquisition-related transaction costs, $2.4 million of pre-tax net insurance
recoveries and gains resulting from the Saginaw fire, and $2.2 million of pre-tax amortization and
other acquisition-related accounting adjustments resulting from the
purchase accounting for Geneva. This compares to net income in 2019
which included $0.6 million of
pre-tax acquisition-related transaction costs and $2.3 million related to a favorable legal
settlement. After considering non-recurring items, adjusted
net income was $20.9 million, or
$2.12 per diluted share, in 2020,
compared to $26.6 million, or
$2.72 per diluted share, in 2019. See
the Company's "Reconciliation of Non-GAAP Financial Measures" in
the table below.
Management Commentary
"Despite 2020 being extremely challenging due to the many
difficulties created by COVID-19, we were able to put together a
solid year," said Scott Montross,
President and CEO of the Company. "Our steel pressure pipe market
was affected by bidding delays, and as a result it was smaller than
the near record year we had in 2019. However, our strategy to grow
in the precast concrete market that started with the acquisition of
Geneva Pipe and Precast Company
helped offset some of the decline in our legacy business. As we
expected, fourth quarter revenues and gross margins were down
sequentially as pandemic-related delays pushed project bidding into
2021 and the precast concrete business was in the seasonally slow
time of the year. Our steel pressure pipe backlog moderated down to
$221 million, which is still very high by historical standards
and represents the tenth straight quarter in excess of
$200 million."
Mr. Montross continued, "We expect the first quarter to be
challenging due to volatility and delivery disruptions in the steel
market, extreme weather conditions in various parts of the country,
as well as the period specific effects of bidding delays in the
steel pressure pipe business. However, we are currently seeing a
strong 2021 bidding calendar for the steel pressure pipe business
as well as a precast concrete order book that is strong even during
the seasonally slow time of the year. As a result, we expect market
conditions to stabilize as we move through the early part of
2021."
Balance Sheet Details
Total cash and cash equivalents were $37.9 million as of December 31, 2020,
up from $30.4 million as of
September 30, 2020 primarily due to increased operating cash
flows.
As of December 31, 2020, the Company had $13.8 million of outstanding term loan
borrowings and no outstanding revolving loan borrowings, with
additional revolving loan borrowing capacity of approximately
$53 million.
Conference Call Details
A conference call and simultaneous webcast to discuss the
Company's fourth quarter and full year 2020 financial results will
be held on Thursday, March 4, 2021 at 7:00 a.m. PT.
The call will be broadcast live over the Internet hosted on the
Investor Relations section of the Company's website at
investor.nwpipe.com and will be archived online upon completion of
the conference call. For those unable to listen to the live call, a
replay will be available approximately one hour after the event and
will remain available until Thursday, March 18, 2021 by
dialing 1–877–344–7529 in the U.S. or 1–412–317–0088
internationally and entering the replay access code: 10151606.
About Northwest Pipe Company
Founded in 1966, Northwest Pipe Company is a leading
manufacturer for water related infrastructure products. In addition
to being the largest manufacturer of engineered steel water
pipeline systems in North America,
the Company produces high-quality precast and reinforced concrete
products, Permalok® steel casing pipe, bar-wrapped concrete
cylinder pipe, as well as linings, coatings, joints, and one of the
largest offerings of fittings and specialized components. Northwest
Pipe Company provides solution-based products for a wide range of
markets including water transmission and infrastructure, water and
wastewater plant piping, structural stormwater and sewer systems,
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.
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 and order cancelations, timing of customer orders
and deliveries, production schedules, price and availability of raw
materials, 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 business, the Company's
ability to effectively integrate Geneva and other acquisitions into
its business and operations and achieve significant administrative
and operational cost synergies and accretion to financial results,
impacts of recent U.S. tax reform legislation on the Company's
results of operations, adequacy of the Company's insurance
coverage, operating problems at the Company's manufacturing
operations including fires, explosions, inclement weather, and
natural disasters, impacts of pandemics, epidemics, or other public
health emergencies, such as coronavirus disease 2019, and other
risks discussed in the Company's Annual Report on Form 10–K
for the year ended December 31, 2020 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 net income, and adjusted diluted net income 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. This should be considered a supplement
to, and not a substitute for, or superior to, financial measures
calculated in accordance with GAAP.
For more information, visit www.nwpipe.com.
Contact:
Aaron
Wilkins
Chief Financial Officer
Northwest Pipe Company
(360) 397-6294 • investors@nwpipe.com
Or Addo Investor Relations
(310) 829-5400
NORTHWEST PIPE
COMPANY AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended December 31,
|
|
Year Ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
$
|
69,381
|
|
$
|
72,245
|
|
$
|
285,907
|
|
$
|
279,317
|
Cost of
sales
|
|
57,018
|
|
|
55,325
|
|
|
235,388
|
|
|
232,133
|
Gross
profit
|
|
12,363
|
|
|
16,920
|
|
|
50,519
|
|
|
47,184
|
Selling,
general, and administrative expense
|
|
5,769
|
|
|
4,643
|
|
|
24,954
|
|
|
18,495
|
Operating
income
|
|
6,594
|
|
|
12,277
|
|
|
25,565
|
|
|
28,689
|
Other
income
|
|
138
|
|
|
1,407
|
|
|
953
|
|
|
4,383
|
Interest
income
|
|
-
|
|
|
10
|
|
|
49
|
|
|
40
|
Interest
expense
|
|
(214)
|
|
|
(107)
|
|
|
(933)
|
|
|
(472)
|
Income before
income taxes
|
|
6,518
|
|
|
13,587
|
|
|
25,634
|
|
|
32,640
|
Income tax
expense
|
|
1,297
|
|
|
1,571
|
|
|
6,584
|
|
|
4,738
|
Net
income
|
$
|
5,221
|
|
$
|
12,016
|
|
$
|
19,050
|
|
$
|
27,902
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.54
|
|
$
|
1.23
|
|
$
|
1.95
|
|
$
|
2.86
|
Diluted
|
$
|
0.53
|
|
$
|
1.22
|
|
$
|
1.93
|
|
$
|
2.85
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in
per share calculations:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
9,805
|
|
|
9,747
|
|
|
9,788
|
|
|
9,741
|
Diluted
|
|
9,902
|
|
|
9,816
|
|
|
9,873
|
|
|
9,779
|
|
|
|
|
|
|
|
|
|
|
|
|
NORTHWEST PIPE
COMPANY AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31,
|
|
|
|
2020
|
|
2019
|
Assets
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
37,927
|
|
$
|
31,014
|
|
|
Trade and other
receivables, net
|
|
42,680
|
|
|
38,026
|
|
|
Contract
assets
|
|
76,985
|
|
|
91,186
|
|
|
Inventories
|
|
29,177
|
|
|
30,654
|
|
|
Prepaid expenses and
other
|
|
5,194
|
|
|
4,159
|
|
|
Total current
assets
|
|
191,963
|
|
|
195,039
|
|
Property and
equipment, net
|
|
110,184
|
|
|
99,631
|
|
Operating lease
right-of-use-assets
|
|
30,813
|
|
|
7,683
|
|
Goodwill
|
|
22,985
|
|
|
-
|
|
Intangible assets,
net
|
|
10,518
|
|
|
1,231
|
|
Other
assets
|
|
6,552
|
|
|
6,661
|
|
|
Total
assets
|
$
|
373,015
|
|
$
|
310,245
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Current portion of
long-term debt
|
$
|
7,701
|
|
$
|
-
|
|
|
Accounts
payable
|
|
12,993
|
|
|
15,493
|
|
|
Accrued
liabilities
|
|
16,814
|
|
|
12,150
|
|
|
Contract
liabilities
|
|
6,189
|
|
|
12,281
|
|
|
Current portion of
operating lease liabilities
|
|
2,204
|
|
|
1,642
|
|
|
Total current
liabilities
|
|
45,901
|
|
|
41,566
|
|
Long-term debt, less
current portion
|
|
5,888
|
|
|
-
|
|
Operating lease
liabilities, less current portion
|
|
27,911
|
|
|
6,247
|
|
Deferred income
taxes
|
|
12,481
|
|
|
4,265
|
|
Other long-term
liabilities
|
|
11,208
|
|
|
10,009
|
|
|
Total
liabilities
|
|
103,389
|
|
|
62,087
|
|
|
|
|
|
|
|
|
|
Stockholders'
equity
|
|
269,626
|
|
|
248,158
|
|
|
Total liabilities and
stockholders' equity
|
$
|
373,015
|
|
$
|
310,245
|
|
|
|
|
|
|
|
|
NORTHWEST PIPE
COMPANY AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
(Unaudited)
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
December 31,
|
|
Year Ended
December 31,
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
Net
income, as reported
|
$
5,221
|
|
$
12,016
|
|
$
19,050
|
|
$
27,902
|
Adjustments for
non-recurring items:
|
|
|
|
|
|
|
|
Acquisition-related transaction costs
|
-
|
|
114
|
|
2,624
|
|
629
|
Saginaw fire incremental production costs (insurance recoveries),
net
|
-
|
|
(1,363)
|
|
(1,399)
|
|
1,580
|
Saginaw fire gain on property and equipment replacement
|
-
|
|
(1,210)
|
|
(951)
|
|
(1,641)
|
Amortization of acquired intangibles
|
519
|
|
-
|
|
1,902
|
|
-
|
Acquisition-related inventory charges
|
-
|
|
-
|
|
266
|
|
-
|
Legal settlement other income
|
-
|
|
-
|
|
-
|
|
(2,284)
|
Estimated tax impact of non-recurring items
|
(123)
|
|
623
|
|
(604)
|
|
429
|
Adjusted
net income
|
$
5,617
|
|
$
10,180
|
|
$
20,888
|
|
$
26,615
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
income per share, as reported
|
$
0.53
|
|
$
1.22
|
|
$
1.93
|
|
$
2.85
|
|
|
|
|
|
|
|
|
|
Adjusted
diluted income per share
|
$
0.57
|
|
$
1.04
|
|
$
2.12
|
|
$
2.72
|
|
|
|
|
|
|
|
|
|
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SOURCE Northwest Pipe Company