SOURCE: Northwest Pipe Company

March 05, 2008 05:00 ET

Northwest Pipe Reports Record Results

PORTLAND, OR--(Marketwire - March 5, 2008) - Northwest Pipe Company (NASDAQ: NWPX) today reported the highest annual sales and earnings in its history. Sales for the year ended December 31, 2007 were $382.8 million compared to $346.6 million in 2006. Net income was $20.8 million, compared to $20.0 million in 2006. The 2006 results included a non-recurring gain on sale of approximately $7.7 million.

For the fourth quarter, the Company reported sales of $98.2 million compared to $97.5 million for the fourth quarter of 2006. Fourth quarter net income was $5.6 million, or $0.60 per diluted share, slightly lower than the $6.0 million recorded for the same quarter last year.

Water Transmission

Sales in the Water Transmission Group for 2007 were $274.8 million compared to $244.8 million for 2006. Gross profit for 2007 was $60.6 million, or 22.0% of sales, compared to $46.6 million, or 19.0% of sales in 2006.

For the fourth quarter, sales were $76.8 million, and gross profit was $17.4 million, or 22.7% of sales. This is the highest volume ever for this group and the highest gross profit margin reported for a quarter since 2003. "The Water Transmission Group's performance was outstanding during the quarter," said Brian W. Dunham, president and chief executive officer of the Company. "The higher margin reflects that performance, some incremental improvements in the market, and a positive product mix. While this margin performance won't necessarily repeat every quarter, we do believe it is indicative of real improvements in our markets and our facilities."

Tubular Products

The Tubular Products Group's 2007 sales were $95.0 million, compared to $84.8 million in 2006. Gross profit was $10.0 million, or 10.5% of sales, compared to $8.9 million, or 10.5% of sales for 2006.

Sales were $17.9 million and gross profit was $1.0 million in the fourth quarter of 2007. "Although we met our objectives for the year, the fourth quarter for this Group was disappointing," said Dunham. "Volume was down as we changed our direction in the energy market and we were significantly impacted by adverse weather in the Midwest. We do expect to see rapid improvement and margin should be back in the low double digit range in the first quarter of 2008."

Fabricated Products

Sales in the Fabricated Products Group were $13.0 million for the year and $3.5 million in the fourth quarter. The Group lost $400,000 in the fourth quarter and ended the year with a loss of $350,000. The Company plans to include this business in the Water Transmission Group beginning in the first quarter of 2008. This reflects the internal management structure and strategic direction for this Group.

Outlook

The Company's backlog is at an all time high at $212 million and the market continues to look very active in 2008. Consequently, the Company expects to improve upon 2007's results in both sales and earnings over the course of the year. At this time, given the timing of projected market activity, the second half of the year should be significantly better than the first half and the second quarter should be stronger than the first quarter. "While we expect solid performance in the first quarter, we do not expect to match the earnings we are reporting today in the Water Transmission Group, which were based on historically high volume and a strong product mix," said Dunham.

"We expect a quick return to better margins and volume in the Tubular Products Group in the first quarter," continued Dunham. "In spite of concerns about a slower overall economy, we see growth opportunities in non-residential construction products, energy products, and traffic signpost products in 2008."

Over the past few months there has been a rapid increase in the cost of steel, the Company's primary raw material. "Steel price increases cause different challenges in our two main groups," said Dunham. "In Tubular Products, the challenge is to pass on these increases to customers. At this time, prices for our products are going up and we believe the market dynamics are strong enough to absorb expected increases. In the Water Transmission Group, the risk is that we might underestimate the cost of steel in fixed price contracts. While this is possible, we do not see significant exposure at this time."

"Steel availability is an issue for both groups. In the first quarter of 2008, our overall revenues in Water Transmission will be somewhat lower because delivery lead times have increased. We believe this is only a near term timing problem. In general, for both groups, we believe we have adequate supply of steel to meet our needs, but we are watching this situation carefully," concluded Dunham.

About Northwest Pipe Company

Northwest Pipe Company manufactures welded steel pipe and other products in three 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 construction, agricultural, energy, industrial, and mechanical applications. Its Fabricated Products Group manufactures propane tanks, water transmission fittings, and other fabricated products. The Company is headquartered in Portland, Oregon, and has nine 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 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.

Conference Call

The Company's fourth quarter 2007 earnings conference call will be held on Wednesday, March 5, 2008, 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    For the Year Ended
                                    December 31           December 31
                                --------------------  --------------------
                                  2007       2006       2007       2006
                                ---------  ---------- ---------  ---------

Net Sales:
    Water Transmission          $  76,840  $   72,039 $ 274,760  $ 244,810
    Tubular Products               17,910      20,991    95,019     84,756
    Fabricated Products             3,459       4,469    13,045     17,025
                                ---------  ---------- ---------  ---------
        Net Sales                  98,209      97,499   382,824    346,591

Cost of Sales:
    Water Transmission             59,402      58,152   214,196    198,209
    Tubular Products               16,921      18,863    85,011     75,824
    Fabricated Products             3,863       4,249    13,402     15,845
                                ---------  ---------- ---------  ---------
        Total Cost of Sales        80,186      81,264   312,609    289,878

Gross Profit:
    Water Transmission             17,438      13,887    60,564     46,601
    Tubular Products                  989       2,128    10,008      8,932
    Fabricated Products              (404)        220      (357)     1,180
                                ---------  ---------- ---------  ---------
        Gross Profit               18,023      16,235    70,215     56,713

Selling, General and
 Administrative                     7,832       7,087    30,703     27,385
Gain on Sale of Asset                   -           -         -     (7,674)
                                ---------  ---------- ---------  ---------

Operating Income                   10,191       9,148    39,512     37,002

Interest Expense, net               1,701       1,380     6,792      6,700
                                ---------  ---------- ---------  ---------

Income Before Income Taxes          8,490       7,768    32,720     30,302

Provision for Income Taxes          2,922       1,789    11,888     10,283
                                ---------  ---------- ---------  ---------

Net Income                      $   5,568  $    5,979 $  20,832  $  20,019
                                =========  ========== =========  =========

Basic Earnings per Share        $    0.62  $     0.74 $    2.32  $    2.80
                                =========  ========== =========  =========

Diluted Earnings per Share      $    0.60  $     0.72 $    2.26  $    2.69
                                =========  ========== =========  =========

Shares Used in Per Share
 Calculation:
    Basic                           9,014       8,035     8,962      7,152
                                =========  ========== =========  =========

    Diluted                         9,264       8,349     9,235      7,446
                                =========  ========== =========  =========


        CONDENSED SELECTED BALANCE SHEET AND OTHER DATA (Unaudited)
                      (Dollar amounts in thousands)


                                                      December   December
                                                         31,        31,
                                                        2007       2006
                                                      ---------  ---------

Assets:
    Cash and Cash Equivalents                         $     234  $   4,259
    Trade and Other Receivables, Net                     49,300     68,425
    Cost and Estimated Earnings in Excess
     of Billings on Uncompleted Contracts               121,058     74,353
    Inventories                                          62,805     79,300
    Other Current Assets                                 10,487     11,177
                                                      ---------  ---------
        Total Current Assets                            243,884    237,514
    Property and Equipment, Net                         179,977    160,776
    Other Assets                                         29,702     26,161
                                                      ---------  ---------
        Total Assets                                  $ 453,563  $ 424,451
                                                      =========  =========

Liabilities:
    Current Maturities of Long-Term Debt              $   5,851  $   9,663
    Accounts Payable                                     41,684     50,865
    Accrued Liabilities                                  12,311     10,243
    Billings in Excess of Cost and Estimated Earnings
     on Uncompleted Contracts                             2,514          -
                                                      ---------  ---------
        Total Current Liabilities                        62,360     70,771
    Long-Term Note Payable to Financial Institution      54,415     43,000
    Other Long-Term Debt, Less Current Maturities        34,929     47,915
    Other Liabilities                                    45,577     31,939
                                                      ---------  ---------
        Total Liabilities                               197,281    193,625

Stockholders’ Equity                                    256,282    230,826
                                                      ---------  ---------
        Total Liabilities and Stockholders’ Equity    $ 453,563  $ 424,451
                                                      =========  =========

Other Data:
    Working Capital                                   $ 181,524  $ 166,743
    Capital Expenditures                                 22,971     58,428
    Depreciation and Amortization                         4,864      3,782
    Debt as a Percent of Capitalization                    27.1%      29.5%

Contact Information

  • CONTACT:
    Brian Dunham
    Chief Executive Officer
    503-382-2332