Northwest Pipe Company Announces Second Quarter 2023 Financial Results

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02 Aug, 2023, 16:15 ET

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VANCOUVER, Wash., Aug. 2, 2023 /PRNewswire/ --Northwest Pipe Company (NASDAQ: NWPX) (the "Company"), a leading manufacturer of water-related infrastructure products including engineered steel water pipeline systems; stormwater and wastewater technology products; high-quality precast and reinforced concrete products; pump lift stations; steel casing pipe, bar-wrapped concrete cylinder pipe, and one of the largest offerings of pipeline system joints, fittings, and specialized components, today announced its financial results for the second quarter ended June 30, 2023. The Company will broadcast its second quarter 2023 earnings conference call on Thursday, August 3, 2023 at 7:00 a.m. PT.

Management Commentary

"The Precast business delivered $39.1 million in revenue, gross margins of 25.3%, and an order book of $58 million, which was flat to the previous quarter. While the elevated interest rates and the associated impact on both commercial and residential construction has moderately affected the segment from the record highs of 2022, we are still projecting a good year by historical standards," said Scott Montross, President and Chief Executive Officer of Northwest Pipe Company. "Following a slow first quarter, the SPP business rebounded producing $77.3 million of revenue and gross margins of 16.3%, 190 basis points higher than the second quarter of 2022. The SPP backlog including confirmed orders declined from the near record high at the end of the first quarter to $343 million; however, we are currently awaiting the potential award of multiple projects that have recently bid that could stabilize the near-term backlog. Starting in the second quarter, we expect SSP revenue to remain at a higher level similar to 2022, but with improved gross margins."

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Northwest Pipe Company defines "backlog" as the balance of remaining performance obligations under signed contracts for Engineered Steel Pressure Pipe products for which revenue is recognized over time.

Northwest Pipe Company defines "confirmed orders" as Engineered Steel Pressure Pipe projects for which the Company has been notified that it is the successful bidder, but a binding agreement has not been executed.

Northwest Pipe Company defines "order book" as unfulfilled orders outstanding at the measurement date for its Precast Infrastructure and Engineered Systems segment.

Second Quarter 2023 Financial Results

Consolidated

Engineered Steel Pressure Pipe Segment (SPP)

Precast Infrastructure and Engineered Systems Segment (Precast)

Balance Sheet and Cash Flow

Conference Call Details

A conference call and simultaneous webcast to discuss the Company's second quarter 2023 financial results will be held on Thursday, August 3, 2023, at 7:00 a.m. Pacific Time. The call will be broadcast live 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 three hours after the event and will remain available until Thursday, August 17, 2023, by dialing 1‑844‑512‑2921 in the U.S. or 1‑412‑317‑6671 internationally and entering the replay access code: 10180262.

About Northwest Pipe Company

Founded in 1966, Northwest Pipe Company is a leading manufacturer of water-related infrastructure products. In addition to being the largest manufacturer of engineered steel water pipeline systems in North America, the Company manufactures stormwater and wastewater technology products; high-quality precast and reinforced concrete products; pump lift stations; steel casing pipe, bar-wrapped concrete cylinder pipe, and one of the largest offerings of pipeline system joints, fittings, and specialized components. Strategically positioned to meet growing water and wastewater infrastructure needs, Northwest Pipe Company provides solution-based products for a wide range of markets under the ParkUSA, Geneva Pipe and Precast, Permalok®, and Northwest Pipe Company lines. The Company's diverse team is committed to quality and innovation while demonstrating the Company's core values of accountability, commitment, and teamwork. The Company is headquartered in Vancouver, Washington, and has 13 manufacturing facilities across North America. Please visit www.nwpipe.com for more information.

Forward-Looking Statements

Statements in this press release by Scott Montross contain "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, economic uncertainty and associated trends in macroeconomic conditions, including potential recession, inflation, and the state of the housing market, interest rate risk and changes in market interest rates, including the impact on the Company's customers and related demand for its products, 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 Park Environmental Equipment, LLC and other acquisitions into its business and operations and achieve significant administrative and operational cost synergies and accretion to financial results, effects of security breaches, computer viruses, and cybersecurity incidents, impacts of U.S. tax reform legislation on the Company's results of operations, adequacy of the Company's insurance coverage, supply chain challenges, labor shortages, ongoing military conflicts in Ukraine and related consequences, operating problems at the Company's manufacturing operations including fires, explosions, inclement weather, and floods and other natural disasters, material weaknesses in the Company's internal control over financial reporting and its ability to remediate such weaknesses, impacts of pandemics, epidemics, or other public health emergencies, and other risks discussed in the Company's Annual Report on Form 10‑K for the year ended December 31, 2022 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. This non-GAAP financial measure is provided to better enable investors and others to assess the Company's ongoing operating 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 WilkinsChief Financial OfficerNorthwest Pipe Company [email protected]

Addo Investor Relations [email protected]

NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(In thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Net sales:

Engineered Steel Pressure Pipe

77,255

77,068

140,801

151,783

Precast Infrastructure and Engineered Systems

39,117

41,454

74,668

76,070

Total net sales

116,372

118,522

215,469

227,853

Cost of sales:

Engineered Steel Pressure Pipe

64,684

65,963

120,448

133,489

Precast Infrastructure and Engineered Systems

29,207

28,479

55,963

55,498

Total cost of sales

93,891

94,442

176,411

188,987

Gross profit:

Engineered Steel Pressure Pipe

12,571

11,105

20,353

18,294

Precast Infrastructure and Engineered Systems

9,910

12,975

18,705

20,572

Total gross profit

22,481

24,080

39,058

38,866

Selling, general, and administrative expense

11,016

10,127

22,882

19,495

Operating income

11,465

13,953

16,176

19,371

Other income (expense)

(134)

(163)

Interest expense

(1,191)

(869)

(2,560)

(1,429)

Income before income taxes

10,140

13,085

13,453

17,987

Income tax expense

2,692

3,412

3,643

4,755

Net income

7,448

9,673

9,810

13,232

Net income per share:

Basic

0.74

0.98

1.34

Diluted

0.74

0.97

1.33

Shares used in per share calculations:

Basic

10,000

9,918

9,970

9,900

Diluted

10,066

9,968

10,081

9,971

NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)(In thousands)

June 30, 2023

December 31, 2022

Assets

Current assets:

Cash and cash equivalents

4,152

3,681

Trade and other receivables, net

63,419

71,563

Contract assets

122,359

121,778

Inventories

84,579

71,029

Prepaid expenses and other

4,919

10,689

Total current assets

279,428

278,740

Property and equipment, net

137,506

133,166

Operating lease right-of-use assets

91,106

93,124

Goodwill

55,504

Intangible assets, net

33,160

35,264

Other assets

6,034

5,542

Total assets

602,738

601,340

Liabilities and Stockholders' Equity

Current liabilities:

Current debt

10,756

Accounts payable

26,721

26,968

Accrued liabilities

25,770

30,957

Contract liabilities

26,990

17,456

Current portion of operating lease liabilities

4,887

4,702

Total current liabilities

95,124

90,839

Borrowings on line of credit

70,069

83,696

Operating lease liabilities

87,789

89,472

Deferred income taxes

11,834

11,402

Other long-term liabilities

9,321

7,657

Total liabilities

274,137

283,066

Stockholders' equity

328,601

318,274

Total liabilities and stockholders' equity

602,738

601,340

NORTHWEST PIPE COMPANY AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)(In thousands)

Six Months Ended June 30,

2023

2022

Cash flows from operating activities:

Net income

9,810

13,232

Depreciation and finance lease amortization

5,642

6,065

Amortization of intangible assets

2,104

2,303

Deferred income taxes

417

299

Share-based compensation expense

2,304

1,308

Other, net

1,325

(14)

Changes in operating assets and liabilities, net

5,877

(13,024)

Net cash provided by operating activities

27,479

10,169

Cash flows from investing activities:

Purchases of property and equipment

(8,414)

(8,456)

Payment of working capital adjustment in acquisition of business

(2,731)

Other investing activities

Net cash used in investing activities

(11,136)

(8,426)

Cash flows from financing activities:

Borrowings on line of credit

72,912

80,908

Repayments on line of credit

(86,539)

(80,956)

Payments on finance lease obligations

(311)

(265)

Tax withholdings related to net share settlements of equity awards

(1,652)

(853)

Other financing activities

(282)

(31)

Net cash used in financing activities

(15,872)

(1,197)

Change in cash and cash equivalents

471

546

Cash and cash equivalents, beginning of period

3,681

2,997

Cash and cash equivalents, end of period

4,152

3,543

SOURCE Northwest Pipe Company

Northwest Pipe Company