PORTLAND, OR -- (MARKET WIRE) -- March 21, 2007 -- Northwest Pipe Company (
NASDAQ:
NWPX) today
reported the highest annual sales and earnings in its history. Sales for
the year ended December 31, 2006 were $346.6 million compared to $329.0
million in 2005. Net income for the year ended December 31, 2006 was $20.0
million, or $2.69 per diluted share, compared to $13.4 million, or $1.90
per diluted share, in 2005.
In the fourth quarter of 2006, sales were a record $97.5 million compared
to $77.1 million for the fourth quarter of 2005. Net income for the fourth
quarter was $6.0 million, or $0.72 per diluted share, compared to $3.4
million, or $0.48 per diluted share for the fourth quarter last year.
Water Transmission
Sales in the Water Transmission Group for 2006 were $244.8 million compared
to $232.1 million for 2005. Gross profit for 2006 was $46.6 million, or
19.0% of sales, compared to $46.8 million, or 20.1% of sales in 2005.
For the fourth quarter, sales were $72.0 million, compared to $54.4 million
for the fourth quarter of 2005. Gross profit for the fourth quarter of
2006 was $13.9 million, or 19.3% of sales, compared to $11.3 million, or
20.7% of sales for 2005. Both the sales and gross profit results are new
records for this Group.
"The Water Transmission Group continued its growth trend which started in
the second quarter of this year. Strong market conditions combined with
our leading market share led to increased bookings and ultimately higher
production levels through the second half of 2006," said Brian W. Dunham,
president and CEO. "I am pleased with our ability to consistently operate
through the second half of the year at higher production levels. Even
though we were producing at higher rates, we were still able to increase
our backlog slightly to $198 million at year-end because of continuing
strong market conditions. This is the largest backlog we have ever
reported," said Dunham.
Tubular Products
The Tubular Products Group's sales were $84.8 million in 2006 compared to
$80.7 million for 2005. Gross profit was $8.9 million, or 10.5% of sales,
compared to $5.6 million, or 7.0% of sales for 2005.
Sales were $21.0 million in the fourth quarter of 2006 compared to $17.7
million reported for the same period in 2005. Gross profit was $2.1
million in the fourth quarter of 2006 compared to $1.7 million in the
fourth quarter of 2005.
"These improved results were expected as we began to see the benefits of
redirecting our tubular sales and production efforts from products that
compete directly with imports to energy, traffic sign support products and
other products with better fundamental opportunities," noted Dunham. "We
are pleased with the results so far and expect continued improvement in
this Group in 2007."
Fabricated Products
Sales in the Fabricated Products Group were $17.0 million compared to $16.2
million for 2005. Gross profit was $1.2 million, or 6.9% of sales,
compared to $1.4 million, or 8.6% of sales for 2005.
Sales were $4.5 million in the fourth quarter of 2006, compared to $5.0
million for the fourth quarter of 2005. The gross profit for this Group
was $220,000 or 4.9% of sales in the fourth quarter of 2006, compared to
$695,000, or 14.0% of sales, for the same period in the prior year. The
decrease in sales and gross profit resulted from lower demand for propane
tanks, our primary product for this segment. The warmer than normal
weather experienced in the fourth quarter by most of the country lowered
demand and higher cost steel contributed to the lower gross profit.
"The Fabricated Products Group's results were disappointing," said Dunham.
"While our propane tank business is about what we had expected, we had
hoped to report better results from some of the new products we are working
on in this Group. It is taking much longer than we had expected to convert
prototypes and trial orders into production orders."
Our newest initiative for this Group, producing custom fabrication fittings
for our Water Transmission Group, is under way. "The results look
promising and additional orders are scheduled as we evaluate the long-term
opportunity for this initiative," concluded Dunham.
Follow-On Offering
The Company completed a follow-on offering for 1,955,000 shares in November
2006. The offering generated net proceeds to the Company of $53.1 million.
The majority of this was used to pay off operating leases while the balance
reduced the borrowings on the Company's credit line.
Outlook
Our water transmission bookings in the second half of 2006 were very
strong. We continue to track a large number of projects in 2007, and
expect the 2007 market to be at least equal to 2006. "We are entering 2007
with a very good backlog. Combined with our expectations for the market,
we expect a strong year in 2007 in the Water Transmission Group -- both in
revenues and gross profit," said Dunham. "In the near-term, while we
expect good first quarter results, they won't be as robust as the results
we are reporting today. We have had significant weather problems during
the first quarter, which have primarily affected our Denver Division.
Additionally, we lost nearly a full month of production from one of our
mills in Denver which has gone through a major maintenance and rebuild
project. We expect improving results later in the year assuming the market
develops as expected."
"In the Tubular Products Group we have completed the upgrade to our
Atchison plant. This will allow us to provide a broader range of energy
products, relieve production bottlenecks and increase total capacity,"
stated Dunham. "The traffic sign support market and other product lines
are expected to grow steadily in 2007. Overall, we are expecting solid
growth out of this Group in revenues and we expect to maintain margins in
the low double digit range."
Our Fabricated Products Group is expected to continue generally at its
current level in sales and profitability. "We see limited growth
opportunities in the propane tank market and growth in the other fabricated
products markets has been much more difficult to achieve than we originally
expected. Using this Group to support our Water Transmission Group by
providing fabrication capabilities appears to provide the greatest
opportunity and best utilization of its welding and fabrication
capabilities," stated Dunham.
Other Matters
In September 2006, the SEC staff issued Staff Accounting Bulletin No. 108
(SAB 108), "Considering the Effects of Prior Year Misstatements when
Quantifying Misstatements in Current Year Financial Statements." The
Company adopted SAB 108 as of December 31, 2006 by initially applying the
provisions of SAB 108 using the cumulative effect transition method in
connection with the finalization of our financial statements for the year
ended December 31, 2006.
As a result of adopting SAB 108, total shareholders' equity as of January
1, 2006, was reduced by $3.4 million. No previously reported earnings were
affected. Complete disclosure of the details of this new accounting
pronouncement and its effect on the Company will be included in the
Company's Annual Report on Form 10K for the year ended December 31, 2006.
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, 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 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 2006 earnings conference call will be held on
Thursday, March 22, 2007, at 8:00 a.m. PT 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
STATEMENTS OF OPERATIONS
(Dollar and share amounts in thousands, except per share amounts)
--------------------- ---------------------
Three Months Ended For the Year Ended
December 31 December 31
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- --------- ----------
Net Sales:
Water Transmission $ 72,039 $ 54,359 $ 244,810 $ 232,102
Tubular Products 20,991 17,732 84,756 80,664
Fabricated Products 4,469 4,977 17,025 16,240
---------- ---------- --------- ----------
Net Sales 97,499 77,068 346,591 329,006
Cost of Sales:
Water Transmission 58,152 43,101 198,209 185,343
Tubular Products 18,863 16,056 75,824 75,028
Fabricated Products 4,249 4,282 15,845 14,845
---------- ---------- --------- ----------
Total Cost of Sales 81,264 63,439 289,878 275,216
Gross Profit:
Water Transmission 13,887 11,258 46,601 46,759
Tubular Products 2,128 1,676 8,932 5,636
Fabricated Products 220 695 1,180 1,395
---------- ---------- --------- ----------
Gross Profit 16,235 13,629 56,713 53,790
Selling, General and
Administrative 7,087 7,152 27,385 26,318
Gain on Sale of Asset - - (7,674) -
---------- ---------- --------- ----------
Operating Income 9,148 6,477 37,002 27,472
Interest Expense 1,380 1,884 6,700 7,383
---------- ---------- --------- ----------
Income Before Income Taxes 7,768 4,593 30,302 20,089
Provision for Income Taxes 1,789 1,202 10,283 6,703
---------- ---------- --------- ----------
Net Income $ 5,979 $ 3,391 $ 20,019 $ 13,386
========== ========== ========= ==========
Basic Earnings per Share $ 0.74 $ 0.50 $ 2.80 $ 1.97
========== ========== ========= ==========
Diluted Earnings per Share $ 0.72 $ 0.48 $ 2.69 $ 1.90
========== ========== ========= ==========
Shares Used in Per Share
Calculation:
Basic 8,035 6,837 7,152 6,781
========== ========== ========= ==========
Diluted 8,349 7,101 7,446 7,063
========== ========== ========= ==========
Contact Information: CONTACT:
Brian Dunham
Chief Executive Officer
503-382-2332