Northwest Pipe Company Reports Second Quarter 2015 Results and Announces Conference Call
VANCOUVER, WA -- (Marketwired) -- 08/05/15 -- Northwest Pipe Company (NASDAQ: NWPX) today announced its financial results for the quarter ended June 30, 2015. The Company will broadcast its second quarter 2015 earnings conference call on Thursday, August 6, 2015, at 8:00 AM PDT.
Second Quarter 2015 Results Net sales from continuing operations for the quarter ended June 30, 2015 decreased 47.2% to $53.8 million compared to $102.0 million for the quarter ended June 30, 2014. Gross loss was $2.6 million (negative 4.8% of net sales from continuing operations) in the second quarter of 2015, a decrease in profitability from a gross profit of $11.3 million (11.1% of net sales from continuing operations) in the second quarter of 2014. A non-cash goodwill impairment charge of $5.3 million was recorded in the quarter ended June 30, 2015. Including the impairment charge, the loss from continuing operations for the second quarter of 2015 was $12.1 million or $1.26 per diluted share compared to income from continuing operations of $3.2 million or $0.33 per diluted share for the second quarter of 2014. Excluding the impairment charge, adjusted loss from continuing operations for the second quarter of 2015 was $6.8 million or $0.71 per diluted share.
Water Transmission sales decreased by 38.2% to $38.4 million in the second quarter of 2015 from $62.2 million in the second quarter of 2014. The decrease in net sales was the result of lower production due to reduced demand and project timing, partially offset by higher selling prices per ton due to a higher mix of fabrication in the second quarter of 2015 compared to the second quarter of 2014. Water Transmission gross profit decreased to $1.3 million (3.3% of segment net sales) in the second quarter of 2015 from $11.5 million (18.5% of segment net sales) in the same quarter of 2014. Water Transmission gross profit decreased in total and as a percent of net sales due to continued pricing pressure from the competitive bidding environment for those products.
Tubular Products sales from continuing operations decreased 61.3% to $15.4 million in the second quarter of 2015 from $39.8 million in the second quarter of 2014, driven by a 57% decrease in tons sold and a 10% decrease in selling prices per ton. Tubular Products had a segment gross loss of $3.8 million (negative 25.0% of segment net sales from continuing operations) in the second quarter of 2015 compared to a segment gross loss of $0.2 million (negative 0.4% of segment net sales from continuing operations) in the second quarter of 2014. Gross profit was negatively affected by reduced sales volumes due to lower demand and high levels of imported pipe.
For the six months ended June 30, 2015, free cash flow, defined as net cash generated from operating activities after capital expenditures for property, plant and equipment, was $35.7 million, compared to $24.2 million during the six months ended June 30, 2014.
In connection with the preparation and review of the financial statements for the second quarter of 2015, the Company tested goodwill for impairment, due to changing events and circumstances in the current water transmission market. The Company recorded a non-cash impairment charge of $5.3 million, which was associated with the goodwill for its Water Transmission Group. The impairment charge has no impact on the Company's liquidity.
As of June 30, 2015, the backlog of orders in the Water Transmission segment increased 24% to approximately $109 million compared to a backlog of orders of $88 million as of March 31, 2015. The backlog includes confirmed orders, including the balance of projects in process, and projects for which the Company has been notified that we are the successful bidder even though a binding agreement has not been executed.
Outlook "In the coming quarter, we expect revenue growth of 10-15% in our Water Transmission business as we start production on the next segment of the Integrated Pipeline Project in Texas. Third quarter margins are expected to remain compressed in the mid-single digits. Nevertheless, bidding activity is expected to grow in the third and fourth quarters, leading to improving results in this business," said Scott Montross, President and Chief Executive Officer of the Company. "With the recently announced decision to explore the transformative sale of our remaining energy Tubular Products business, we should now be able to sharpen our focus on enhancing shareholder value through a variety of initiatives, including organic growth and M&A in our core Water Transmission business."
Conference Call The Company will hold its second quarter 2015 earnings conference call on Thursday, August 6, 2015 at 8:00 AM PDT. The live call can be accessed by dialing 1-888-810-4934 passcode NWPIPE. For those unable to attend the live call, a replay will be available approximately one hour after the event and will remain available until Friday, September 4, 2015 by dialing 1-866-396-7645 passcode 6301.
About Northwest Pipe Company Northwest Pipe Company is a leading manufacturer of welded steel pipe and tube products. The Water Transmission Group is the largest manufacturer of engineered steel pipe water systems in North America. With eight Water Transmission manufacturing facilities, the Group is positioned to meet North America's growing needs for water and wastewater infrastructure. The Water Transmission Group serves a wide range of markets and their solution-based products are a good fit for applications including: water transmission, plant piping, energy, tunnels, river crossings, structural, industrial and construction. The Tubular Products Group operates a state-of-the-art electric resistance weld mill facility. The Tubular Products portfolio serves a wide range of markets and its quality certified pipe and tube products are good for applications including: oil and gas, structural industrial, fire protection, low pressure and agricultural. The Company is headquartered in Vancouver, Washington and has manufacturing facilities in the United States and Mexico.
Forward-Looking Statements Statements in this press release by Scott Montross are "forward-looking" statements within the meaning of the Securities Litigation Reform Act of 1995 and Section 21E of the Exchange Act that are based on current expectations, estimates and projections about our 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 us include changes in demand and market prices for our products, product mix, bidding activity, the timing of customer orders and deliveries, production schedules, the price and availability of raw materials, excess or shortage of production capacity, international trade policy and regulations, the results of our exploration of the sale of our remaining energy tubular products business, including our ability to identify and complete any transactions or other actions as a result of such efforts, our ability to identify and complete internal initiatives and/or acquisitions in order to grow our Water Transmission business and other risks discussed in our Annual Report on Form 10-K for the year ended December 31, 2014 and from time to time in our other Securities and Exchange Commission filings and reports. Such forward-looking statements speak only as of the date on which they are made and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release. If we do update or correct one or more forward-looking statements, investors and others should not conclude that we 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 adjusted loss from continuing operations, adjusted loss from continuing operations per diluted share, and free cash flow, which are non-GAAP measures, to better enable investors and others to assess our results and compare them with our competitors. These non-GAAP measures should be considered as a supplement to, and not as a substitute for, or superior to, financial measures calculated in accordance with GAAP.
For more information, visit www.nwpipe.com.
NORTHWEST PIPE COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(Dollar and share amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2015 2014 2015 2014
--------- --------- --------- ---------
Net sales:
Water Transmission $ 38,445 $ 62,205 $ 94,687 $ 105,204
Tubular Products 15,401 39,783 44,024 79,431
--------- --------- --------- ---------
Net sales 53,846 101,988 138,711 184,635
Cost of sales:
Water Transmission 37,190 50,714 85,913 92,045
Tubular Products 19,249 39,957 51,500 76,959
--------- --------- --------- ---------
Total cost of sales 56,439 90,671 137,413 169,004
Gross profit (loss):
Water Transmission 1,255 11,491 8,774 13,159
Tubular Products (3,848) (174) (7,476) 2,472
--------- --------- --------- ---------
Total gross profit (loss) (2,593) 11,317 1,298 15,631
Selling, general and
administrative expense 5,452 5,918 12,426 11,358
Impairment of Water Transmission
goodwill 5,282 - 5,282 -
--------- --------- --------- ---------
Operating income (loss):
Water Transmission (5,815) 9,543 (182) 9,244
Tubular Products (4,254) (589) (8,871) 1,705
Corporate (3,258) (3,555) (7,357) (6,676)
--------- --------- --------- ---------
Total operating income
(loss) (13,327) 5,399 (16,410) 4,273
Other income (expense) 14 26 58 (37)
Interest income 81 82 163 163
Interest expense (286) (569) (703) (1,339)
--------- --------- --------- ---------
Income (loss) before income
taxes from continuing
operations (13,518) 4,938 (16,892) 3,060
Income tax expense (benefit) (1,439) 1,756 (2,712) 1,089
--------- --------- --------- ---------
Income (loss) from continuing
operations (12,079) 3,182 (14,180) 1,971
Income (loss) from discontinued
operations - 10 - (10,883)
--------- --------- --------- ---------
Net income (loss) $ (12,079) $ 3,192 $ (14,180) $ (8,912)
========= ========= ========= =========
Basic income (loss) per share
Continuing operations $ (1.26) $ 0.34 $ (1.48) $ 0.21
Discontinued operations - - - (1.15)
--------- --------- --------- ---------
Total $ (1.26) $ 0.34 $ (1.48) $ (0.94)
========= ========= ========= =========
Diluted income (loss) per share
Continuing operations $ (1.26) $ 0.33 $ (1.48) $ 0.21
Discontinued operations - - - (1.14)
--------- --------- --------- ---------
Total $ (1.26) $ 0.33 $ (1.48) $ (0.93)
========= ========= ========= =========
Shares used in per share
calculations:
Basic 9,557 9,513 9,555 9,510
========= ========= ========= =========
Diluted 9,557 9,605 9,555 9,596
========= ========= ========= =========
NORTHWEST PIPE COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(Dollar amounts in thousands)
June 30, December 31,
2015 2014
------------ ------------
Assets:
Cash and cash equivalents $ 688 $ 527
Trade and other receivables, net 33,533 58,310
Costs and estimated earnings in excess of
billings on uncompleted contracts 49,794 45,847
Inventories 51,151 72,779
Other current assets 13,305 17,776
------------ ------------
Total current assets 148,471 195,239
Property and equipment, net 133,362 132,595
Other assets 12,833 24,048
------------ ------------
Total assets $ 294,666 $ 351,882
============ ============
Liabilities:
Current maturities of long-term debt and capital
leases $ 178 $ 2,170
Accounts payable 14,598 15,480
Accrued liabilities 9,442 9,071
Billings in excess of cost and estimated
earnings on uncompleted contracts 933 2,835
------------ ------------
Total current liabilities 25,151 29,556
Borrowings on line of credit 7,053 45,587
Capital leases, less current maturities 149 225
Other long-term liabilities 30,305 30,879
------------ ------------
Total liabilities 62,658 106,247
Stockholders' equity 232,008 245,635
------------ ------------
Total liabilities and stockholders' equity $ 294,666 $ 351,882
============ ============
Contact: Robin Gantt Chief Financial Officer (360) 397-6250
Source: Northwest Pipe Company