Northwest Pipe Company Announces Fourth Quarter and Full Year 2022 Financial Results

Rhea-AI Summary

Northwest Pipe Company (NASDAQ: NWPX) reported annual net sales of $457.7 million for 2022, a 37.3% increase year-over-year. The gross profit reached a record $85.9 million, up 94.0% from the previous year. The net income was $31.1 million, equating to $3.11 per diluted share. Total backlog amounted to $274 million, with confirmed orders reaching $372 million. The Engineered Steel Pressure Pipe segment achieved $307.6 million in revenue, while the Precast Infrastructure segment generated $150.1 million. Challenges include customer delays and weather impacts affecting production.

Positive

• Annual net sales increased 37.3% to $457.7 million.
• Record gross profit of $85.9 million, up 94.0% year-over-year.
• Record net income of $31.1 million, or $3.11 per diluted share.

Negative

• Customer delays affecting near-term project production.
• Severe weather events leading to unscheduled downtime.

• Annual net sales of $457.7 million increased 37.3% year-over-year
• Record annual gross profit of $85.9 million increased 94.0% year-over-year
• Record annual net income of $3.11 per diluted share; adjusted net income of $3.35 per diluted share
• Backlog¹ of $274 million; backlog including confirmed orders² of $372 million for the Engineered Steel Pressure Pipe segment ("SPP"), a new record
• Order book³ of $64 million for the Precast Infrastructure and Engineered Systems segment ("Precast")

VANCOUVER, Wash., March 15, 2023 /PRNewswire/ -- Northwest Pipe Company (NASDAQ: NWPX) (the "Company"), a leading manufacturer of water-related infrastructure 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 fourth quarter and full year ended December 31, 2022. The Company will broadcast its fourth quarter and full year 2022 earnings conference call on Thursday, March 16, 2023 at 7:00 a.m. PT.

Management Commentary

"After a slow first quarter, our Engineered Steel Pressure Pipe business gained strength throughout 2022 resulting in a record annual revenue of $307.6 million. We ended the year with a record backlog including confirmed orders of $372 million due to the strong bidding that we experienced in the second half of the year which allowed our backlog to continue to improve in terms of both size and margin quality," said Scott Montross, President and Chief Executive Officer of Northwest Pipe Company. "Precast Infrastructure and Engineered Systems generated a record annual revenue of $150.1 million and a strong gross margin of 27.6%, despite challenges related to the implementation of a new business system at our ParkUSA facilities. Our Precast order book ended 2022 at $64 million in this segment of the business, down 14% from the third quarter of 2022 due to the current uncertainty in the residential housing market and the resulting impact primarily on our Geneva business."

Mr. Montross continued, "We expect that the first quarter of 2023 will be challenging, similar to what we saw in the first quarter of 2022. Even with the record backlog including confirmed orders in SPP, there are customer driven delays affecting the production timing of near-term projects as well as severe weather events that have led to unscheduled downtime time at various SPP facilities. These weather events have also caused unscheduled downtime in our Precast business, further suppressing the first quarter which is already the seasonally slow time of year. After the anticipated slow first quarter, the SPP business levels are expected to normalize similar to what we experienced in 2022. The Precast segment is likely to be moderately affected by the uncertainty in the residential housing market near term but is still expected to have a solid year."

Fourth Quarter 2022 Financial Results

Consolidated

• Net sales increased 4.2% to $106.8 million from $102.5 million in the fourth quarter of 2021.
• Gross profit increased 61.1% to $21.9 million, or 20.5% of net sales, from $13.6 million, or 13.2% of net sales, in the fourth quarter of 2021.
• Net income was $8.0 million, or $0.79 per diluted share, compared to $2.3 million, or $0.23 per diluted share, in the fourth quarter of 2021.
• Adjusted net income was $8.5 million, or $0.85 per diluted share, compared to $6.6 million, or $0.67 per diluted share, in the fourth quarter of 2021. Adjusted net income, which is a non-GAAP financial measure, is reconciled to net income in the table titled "Reconciliation of Non-GAAP Financial Measures" below.

Engineered Steel Pressure Pipe Segment (SPP)

• SPP net sales increased 0.8% to $72.1 million from $71.6 million in the fourth quarter of 2021 driven by a 28% increase in tons produced resulting from changes in project timing, partially offset by a 21% decrease in selling price per ton due to decreased raw materials costs.
• SPP gross profit increased 38.2% to $12.0 million, or 16.6% of SPP net sales, from $8.7 million, or 12.1% of SPP net sales, in the fourth quarter of 2021 primarily due to increased production volumes and reduced raw materials costs.
• SPP backlog was $274 million as of December 31, 2022 compared to $295 million as of September 30, 2022 and $183 million as of December 31, 2021. Backlog including confirmed orders was $372 million as of December 31, 2022 compared to $347 million as of September 30, 2022 and $290 million as of December 31, 2021.

Precast Infrastructure and Engineered Systems Segment (Precast)

• Precast net sales increased 12.1% to $34.7 million from $31.0 million in the fourth quarter of 2021 primarily due to the Park Environmental Equipment, LLC ("ParkUSA") operations, which contributed $20.3 million in net sales in the fourth quarter of 2022 compared to $18.0 million in net sales in the fourth quarter of 2021. In addition, net sales at the Company's pre-existing Precast operations increased 11.3% compared to the fourth quarter of 2021 resulting from a 40% increase in selling prices due to high demand for the Company's concrete products coupled with increased material costs, partially offset by a 21% decrease in volume shipped due to unscheduled equipment downtime and changes in product mix.
• Precast gross profit increased 101.4% to $9.9 million, or 28.5% of Precast net sales, from $4.9 million, or 15.9% of Precast net sales, in the fourth quarter of 2021 primarily due to contributions from the ParkUSA operations as well as improved pricing at the Company's pre-existing Precast operations.
• Precast order book was $64 million as of December 31, 2022 compared to $74 million as of September 30, 2022 and $51 million as of December 31, 2021.

Full Year 2022 Financial Results

Consolidated

• Net sales increased 37.3% to $457.7 million in 2022 from $333.3 million in 2021.
• Gross profit increased 94.0% to $85.9 million, or 18.8% of net sales, in 2022 from $44.3 million, or 13.3% of net sales, in 2021.
• Net income was $31.1 million, or $3.11 per diluted share, in 2022 compared to $11.5 million, or $1.16 per diluted share, in 2021.
• Adjusted net income was $33.6 million, or $3.35 per diluted share, in 2022 compared to $16.5 million, or $1.66 per diluted share, in 2021. See the Company's "Reconciliation of Non-GAAP Financial Measures" in the table below.

Engineered Steel Pressure Pipe Segment (SPP)

• SPP net sales increased 18.4% to $307.6 million in 2022 from $259.8 million in 2021 driven by a 20% increase in selling price per ton due to increased raw materials costs, partially offset by a 1% decrease in tons produced resulting from changes in project timing.
• SPP gross profit increased 42.2% to $44.5 million, or 14.5% of SPP net sales, in 2022 from $31.3 million, or 12.0% of SPP net sales, in 2021 due to improved product pricing. SPP gross profit in 2022 was reduced, in part, by a $2.0 million product liability settlement reserve recorded in the first quarter of 2022.

Precast Infrastructure and Engineered Systems Segment (Precast)

• Precast net sales increased 104.2% to $150.1 million in 2022 from $73.5 million in 2021 primarily due to the ParkUSA operations acquired in October 2021, which contributed $84.7 million and $18.0 million in net sales for 2022 and 2021, respectively. In addition, net sales at the Company's pre-existing Precast operations increased 17.9% from 2021 due to a 45% increase in selling prices resulting from high demand for the Company's concrete products coupled with increased material costs, partially offset by an 18% decrease in volume shipped due to unscheduled equipment downtime and changes in product mix.
• Precast gross profit increased 219.0% to $41.4 million, or 27.6% of Precast net sales, in 2022 from $13.0 million, or 17.7% of Precast net sales, in 2021 due to contributions from the ParkUSA operations, as well as improved pricing at the pre-existing Precast operations. Precast gross profit in 2021 was reduced by $2.3 million of acquisition-related fair value inventory charges.

Liquidity Details

As of December 31, 2022, the Company had $83.7 million of outstanding revolving loan borrowings and additional borrowing capacity of approximately $40 million. The Company expects to have sufficient credit available to support its operations for at least the next twelve months with near-term repayment of outstanding debt remaining a high priority.

Conference Call Details

A conference call and simultaneous webcast to discuss the Company's fourth quarter 2022 financial results will be held on Thursday, March 16, 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, March 30, 2023, by dialing 1-844-512-2921 in the U.S. or 1-412-317-6671 internationally and entering the replay access code: 13736353.

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 are "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 ParkUSA 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 our internal control over financial reporting and our ability to remediate such weaknesses, impacts of pandemics, epidemics, or other public health emergencies, such as coronavirus disease 2019, and other risks discussed in the Company's Annual Report on Form 10–K for the year ended December 31, 2021 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, adjusted net income, and adjusted diluted net income per share. These non-GAAP financial measures are 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 Wilkins
Chief Financial Officer
Northwest Pipe Company
investors@nwpipe.com

Or Addo Investor Relations
nwpx@addo.com 

________________

1	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.
2	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.
3	Northwest Pipe Company defines "order book" as unfulfilled orders outstanding at the measurement date for its Precast Infrastructure and Engineered Systems segment.

 

NORTHWEST PIPE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
		Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
Net sales:
Engineered Steel Pressure Pipe		$	72,126			$	71,579			$	307,572			$	259,823
Precast Infrastructure and Engineered Systems			34,702				30,968				150,093				73,490
Total net sales			106,828				102,547				457,665				333,313
Cost of sales:
Engineered Steel Pressure Pipe			60,143				62,911				263,099				228,542
Precast Infrastructure and Engineered Systems			24,814				26,058				108,711				60,517
Total cost of sales			84,957				88,969				371,810				289,059
Gross profit:
Engineered Steel Pressure Pipe			11,983				8,668				44,473				31,281
Precast Infrastructure and Engineered Systems			9,888				4,910				41,382				12,973
Total gross profit			21,871				13,578				85,855				44,254
Selling, general, and administrative expense			10,885				10,493				41,034				28,222
Operating income			10,986				3,085				44,821				16,032
Other income			41				68				97				328
Interest expense			(1,175)				(515)				(3,568)				(1,202)
Income before income taxes			9,852				2,638				41,350				15,158
Income tax expense			1,891				367				10,201				3,635
Net income		$	7,961			$	2,271			$	31,149			$	11,523
Net income per share:
Basic		$	0.80			$	0.23			$	3.14			$	1.17
Diluted		$	0.79			$	0.23			$	3.11			$	1.16
Shares used in per share calculations:
Basic			9,927				9,871				9,914				9,854
Diluted			10,061				9,954				10,012				9,928

 

NORTHWEST PIPE COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (In thousands)
		December 31,
		2022				2021
Assets
Current assets:
Cash and cash equivalents		$	3,681			$	2,997
Trade and other receivables, net			71,563				52,664
Contract assets			121,778				107,170
Inventories			71,029				59,651
Prepaid expenses and other			10,689				5,744
Total current assets			278,740				228,226
Property and equipment, net			133,166				121,266
Operating lease right-of-use assets			93,124				98,507
Goodwill			55,504				53,684
Intangible assets, net			35,264				39,376
Other assets			5,542				6,620
Total assets		$	601,340			$	547,679
Liabilities and Stockholders' Equity
Current liabilities:
Current debt		$	10,756			$	-
Accounts payable			26,968				32,267
Accrued liabilities			30,957				24,498
Contract liabilities			17,456				2,623
Current portion of operating lease liabilities			4,702				4,704
Total current liabilities			90,839				64,092
Borrowings on line of credit			83,696				86,761
Operating lease liabilities			89,472				93,725
Deferred income taxes			11,402				10,984
Other long-term liabilities			7,657				8,734
Total liabilities			283,066				264,296
Stockholders' equity			318,274				283,383
Total liabilities and stockholders' equity		$	601,340			$	547,679

 

NORTHWEST PIPE COMPANY AND SUBSIDIARIES RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (Unaudited) (In thousands, except per share amounts)
		Three Months Ended December 31,								Year Ended December 31,
		2022				2021				2022				2021
Net income, as reported		$	7,961			$	2,271			$	31,149			$	11,523
Adjustments for non-recurring items:
Acquisition-related transaction costs			-				2,587				59				3,387
Amortization of acquired intangibles (1)			750				879				3,173				879
Acquisition-related fair value inventory charges			-				2,319				-				2,319
Estimated tax impact of non-recurring items			(179)				(1,432)				(793)				(1,630)
Adjusted net income		$	8,532			$	6,624			$	33,588			$	16,478
Diluted net income per share, as reported		$	0.79			$	0.23			$	3.11			$	1.16
Adjusted diluted net income per share		$	0.85			$	0.67			$	3.35			$	1.66

(1)

Amortization of acquired intangibles represents amortization of ParkUSA intangible assets only and is included for comparability purposes between 2022 and 2021.

 

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SOURCE Northwest Pipe Company

FAQ

What were Northwest Pipe Company's earnings results for Q4 2022?

Northwest Pipe Company reported Q4 2022 net sales of $106.8 million, a 4.2% increase from Q4 2021. Net income was $8.0 million, or $0.79 per diluted share.

What is the future outlook for Northwest Pipe Company in 2023?

The company expects challenges in Q1 2023 similar to Q1 2022, affected by customer delays and severe weather, but anticipates normalization in SPP business levels post-Q1.

How did the backlog change for Northwest Pipe Company by the end of 2022?

Northwest Pipe Company reported a backlog of $274 million as of December 31, 2022, with confirmed orders totaling $372 million, both records for the company.

What is the revenue contribution from the Precast segment in 2022?

The Precast Infrastructure segment generated $150.1 million in revenue in 2022, a 104.2% increase year-over-year, primarily due to contributions from ParkUSA operations.