PORTLAND, OR--(Marketwire - October 24, 2007) - Northwest Pipe Company (
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