SOURCE: Northwest Pipe Company

October 24, 2007 05:00 ET

Northwest Pipe Reports Quarterly Results

PORTLAND, OR--(Marketwire - October 24, 2007) - Northwest Pipe Company (NASDAQ: NWPX) today reported its quarterly results for the third quarter of 2007. Sales were $92 million for the quarter, approximately the same as for the third quarter of 2006. Net income, however, was substantially higher at $5.1 million for the third quarter of 2007, compared to $4.1 million for the third quarter of 2006.

Water Transmission

Sales in the Water Transmission Group for the third quarter of 2007 were $63.9 million compared to $65.5 million for the third quarter of 2006. Gross profit was $14.3 million, or 22.5% of sales, compared to $12.7 million, or 19.4% of sales in the third quarter of 2006.

"Sales were a little less than our expectations. Margins, however, were very strong, reflecting a positive mix of projects as well as general improvements in productivity," said Brian W. Dunham, president and CEO of the Company.

Tubular Products

The Tubular Products Group's sales were $25.2 million in the third quarter of 2007 compared to $22.3 million for the third quarter of 2006. Gross profit increased to $3.1 million, or 12.2% of sales, compared to $2.2 million, or 10.1% of sales for the same period last year.

Fabricated Products

Sales in the Fabricated Products Group were $2.9 million in the third quarter of 2007 compared to $4.7 million for the same period in 2006 and the Group reported a small loss. "Volume in our propane tank business was dramatically lower and we have not yet added enough pipe fittings work to offset this decrease. We expect to see these results improve in the future," said Dunham.

Fourth Quarter Outlook

The Company is continuing to forecast a stronger fourth quarter in its Water Transmission Group in overall volume. The significant improvement in margins exhibited in the third quarter, however, is not likely to be repeated. "The margin improvement was partially due to a positive mix of projects as indicated earlier," said Dunham. "Based on our current schedules, the mix will not be as favorable in the fourth quarter. Margins should still exceed last year's comparative results, but will not be as strong as the third quarter's margins."

"As we have said previously, we expect the Tubular Products Group to have lower sales in the fourth quarter as a result of normal seasonality. Additionally, we will not be continuing our strategic alliance with U.S. Steel," stated Dunham. The U.S. Steel alliance began in 2005 with Lone Star Steel, who U.S. Steel subsequently acquired. In this arrangement, the Company produced pipe for the oil and gas industry under Lone Star's label and Lone Star distributed these products. "The termination of this arrangement has impacted our backlog and will also impact our near term sales and earnings," noted Dunham. "However, we are pleased to announce that we have signed an agreement with a new sales and marketing company for energy tubular products, LSS Group of Houston, Texas. We believe we will be back in the market with our products under our own name in the near future."

The Fabricated Products Group is expected to increase sales slightly over its current level and generate a small positive margin in the fourth quarter. "We now have several pipe fittings projects slated for this facility," stated Dunham. "However, we will not see much change in volume or profitability until next year."

Longer Term Outlook

The Company reported a backlog of $174 million as of September 30, 2007 compared to $195 million at September 30, 2006. "While our backlog is lower, as expected, the fourth quarter should be a strong bidding quarter and we are forecasting an increase in the backlog by the end of the year," said Dunham. "Furthermore, the 2008 market continues to look very strong and we are continuing to focus on building our capacity to address the opportunities we expect in the years ahead."

The Company announced the acquisition of Continental Pipe, in Pleasant Grove, Utah, last quarter and is pleased to announce its plans for further expansion at this time. "We have agreed to purchase two new state-of-the-art spiral weld pipe mills from Wilson Byard, Ltd.," Dunham announced. "These mills will be built jointly by Wilson Byard and Northwest Pipe in our Adelanto, California facility. One of the mills will remain in Adelanto, while the other will be designed to be relatively transportable and will ultimately be deployed at a location to be named later."

The Company is also in the process of acquiring additional acreage adjacent to its Saginaw, Texas facility. This land will be used to reconfigure some manufacturing operations and future expansion.

About Northwest Pipe Company

Northwest Pipe Company manufactures welded steel pipe and other products in three business groups. Its Water Transmission Group is a 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, traffic signposts, agricultural, energy, industrial and mechanical applications. Its Fabricated Products Group manufactures propane tanks and other fabricated products. The Company is headquartered in Portland, Oregon 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 sections of this press release captioned "Fourth Quarter Outlook" and "Longer Term Outlook" 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.

                          NORTHWEST PIPE COMPANY
                         STATEMENTS OF OPERATIONS
    (Dollar and share amounts in thousands, except per share amounts)


                            ----------------------- ----------------------
                              Three Months Ended      Nine Months Ended
                                 September 30            September 30
                            ----------------------- ----------------------
                               2007        2006        2007        2006
                            ----------  ----------- ----------- ----------

Net Sales:
    Water Transmission      $   63,862  $    65,481 $   197,919 $  172,771
    Tubular Products            25,209       22,272      77,109     63,765
    Fabricated Products          2,911        4,665       9,585     12,556
                            ----------  ----------- ----------- ----------
      Net Sales                 91,982       92,418     284,613    249,092

Cost of Sales:
    Water Transmission          49,524       52,756     154,794    140,057
    Tubular Products            22,127       20,030      68,089     56,961
    Fabricated Products          3,034        4,422       9,537     11,596
                            ----------  ----------- ----------- ----------
      Total Cost of Sales       74,685       77,208     232,420    208,614

Gross Profit/(Loss):
    Water Transmission          14,338       12,725      43,125     32,714
    Tubular Products             3,082        2,242       9,020      6,804
    Fabricated Products           (123)         243          48        960
                            ----------  ----------- ----------- ----------
      Gross Profit/(Loss)       17,297       15,210      52,193     40,478

Selling, General and
 Administrative                  7,598        6,989      22,873     20,298
Gain on sale of assets                                              (7,674)
                            ----------  ----------- ----------- ----------

Operating Income                 9,699        8,221      29,320     27,854

Interest Expense                 1,653        1,832       5,090      5,320
                            ----------  ----------- ----------- ----------

Income Before Income Taxes       8,046        6,389      24,230     22,534

Provision for Income Taxes       2,977        2,310       8,965      8,494
                            ----------  ----------- ----------- ----------

Net Income                  $    5,069  $     4,079 $    15,265 $   14,040
                            ==========  =========== =========== ==========

Basic Earnings per Share    $     0.57  $      0.59 $      1.71 $     2.05
                            ==========  =========== =========== ==========

Diluted Earnings per Share  $     0.55  $      0.57 $      1.65 $     1.97
                            ==========  =========== =========== ==========

Shares Used in Per Share
 Calculation:
    Basic                        8,971        6,866       8,945      6,854
                            ==========  =========== =========== ==========
    Diluted                      9,242        7,162       9,225      7,139
                            ==========  =========== =========== ==========





                          NORTHWEST PIPE COMPANY
                  SELECTED BALANCE SHEET AND OTHER DATA
                      (Dollar amounts in thousands)


                                              September 30,  December 31,
                                                  2007           2006
                                              -------------  -------------

Assets:
    Cash and Cash Equivalents                 $         191  $       4,259
    Trade and Other Receivables, Net                 64,554         68,425
    Cost and Estimated Earnings in Excess
     of Billings on Uncompleted Contracts            88,801         74,353
    Inventories                                      57,460         79,300
    Other Current Assets                             10,642         11,177
                                              -------------  -------------
        Total Current Assets                        221,648        237,514
    Property and Equipment, Net                     176,296        160,776
    Other Assets                                     27,121         26,161
                                              -------------  -------------
        Total Assets                          $     425,065  $     424,451
                                              =============  =============

Liabilities:
    Current Maturities of Long-Term Debt      $       4,412  $       9,663
    Accounts Payable                                 20,229         50,865
    Accrued Liabilities                              17,551         10,243
                                              -------------  -------------
        Total Current Liabilities                    42,192         70,771
    Long-Term Note Payable to Financial
     Institution                                     58,345         43,000
    Other Long-Term Debt, Less Current
     Maturities                                      40,547         47,915
    Other Liabilities                                35,082         31,939
                                              -------------  -------------
        Total Liabilities                           176,166        193,625

Stockholders’ Equity                                248,899        230,826
                                              -------------  -------------
        Total Liabilities and Stockholders’
         Equity                               $     425,065  $     424,451
                                              =============  =============

Other Data:
    Working Capital                           $     179,456  $     166,743
    Capital Expenditures                             17,817         58,428
    Depreciation and Amortization                     3,665          3,782
    Debt as a Percent of Capitalization                27.8%          29.5%

Contact Information

  • CONTACT:
    Brian Dunham
    Chief Executive Officer
    503-946-1200