Northwest Pipe Reports Third Quarter 2013 Results
11/06/2013 - Northwest Pipe said it believes the fourth quarter may be even more challenging than the third quarter, nothing that it has not yet seen any significant improvement in its OCTG business.
Northwest Pipe Company announced its third quarter 2013 financial results.
Third Quarter 2013 Results
Net sales for the quarter ended 30 September 2013 decreased 10.5% to US$103.0 million compared to US$115.1 million in the quarter ended 30 September 2012. Gross profit was US$8.8 million (8.6% of net sales) in the third quarter of 2013, a decrease from US$11.6 million (10.1% of net sales) in the third quarter of 2012. Operating income was US$2.8 million in the third quarter of 2013, a decrease from US$4.0 million in the third quarter of 2012. Net income for the third quarter of 2013 was US$1.0 million or US$0.11 per diluted share compared to US$3.4 million or US$0.36 per diluted share for the third quarter of 2012.
Water Transmission net sales decreased by 26.2% to US$46.8 million in the third quarter of 2013 from US$63.5 million in the third quarter of 2012. The decrease in net sales was due to a 60% decrease in tons produced, offset by an increase in downstream fabrication services on pipe produced in prior periods. Water Transmission gross profit decreased to US$7.9 million (16.9% of segment net sales) in the third quarter of 2013 from US$9.7 million (15.2% of segment net sales) in the same period of 2012.
Tubular Products net sales increased 8.9% to US$56.2 million in the third quarter of 2013 from US$51.6 million in the third quarter of 2012, driven by a 20% increase in tons sold from 42,900 tons in the third quarter of 2012 to 51,400 tons in the third quarter of 2013, partially offset by a 9% decrease in average selling price per ton. Tubular Products gross profit decreased by 54.1% to US$0.9 million (1.6% of segment net sales) in the third quarter of 2013 from US$1.9 million (3.7% of segment net sales) in the third quarter of 2012.
As of 30 September 2013, the backlog of orders in the Water Transmission segment was approximately US$108 million compared to a backlog of orders of US$241 million as of 30 September 2012. The backlog contains confirmed orders, including the balance of projects in process, and projects for which the company has been notified that it is the successful bidder even though a binding agreement has not been executed.
Outlook
"We believe the fourth quarter may be even more challenging than the third quarter. The Water Transmission segment is expected to have a similar amount of net sales, with expected gross margin in the mid-teens," said Scott Montross, president and chief executive officer of the company. "We have not yet seen any significant improvement in our oil country tubular goods business, therefore we expect to see gross margin in the low positive single-digits."
As previously announced, the company is in the process of exploring strategic alternatives for its oil country tubular goods business, which could include potential acquisitions, divestitures and joint-ventures. No decision has been made at this time to enter into any transaction and there can be no assurance that the exploration of alternatives will result in a transaction or as to the terms, conditions or timetable of any such transaction. It is the company's policy not to comment on any specific discussions or any potential corporate transaction unless and until it enters into a definitive agreement with respect to such transaction.
Third Quarter 2013 Results
Net sales for the quarter ended 30 September 2013 decreased 10.5% to US$103.0 million compared to US$115.1 million in the quarter ended 30 September 2012. Gross profit was US$8.8 million (8.6% of net sales) in the third quarter of 2013, a decrease from US$11.6 million (10.1% of net sales) in the third quarter of 2012. Operating income was US$2.8 million in the third quarter of 2013, a decrease from US$4.0 million in the third quarter of 2012. Net income for the third quarter of 2013 was US$1.0 million or US$0.11 per diluted share compared to US$3.4 million or US$0.36 per diluted share for the third quarter of 2012.
Water Transmission net sales decreased by 26.2% to US$46.8 million in the third quarter of 2013 from US$63.5 million in the third quarter of 2012. The decrease in net sales was due to a 60% decrease in tons produced, offset by an increase in downstream fabrication services on pipe produced in prior periods. Water Transmission gross profit decreased to US$7.9 million (16.9% of segment net sales) in the third quarter of 2013 from US$9.7 million (15.2% of segment net sales) in the same period of 2012.
Tubular Products net sales increased 8.9% to US$56.2 million in the third quarter of 2013 from US$51.6 million in the third quarter of 2012, driven by a 20% increase in tons sold from 42,900 tons in the third quarter of 2012 to 51,400 tons in the third quarter of 2013, partially offset by a 9% decrease in average selling price per ton. Tubular Products gross profit decreased by 54.1% to US$0.9 million (1.6% of segment net sales) in the third quarter of 2013 from US$1.9 million (3.7% of segment net sales) in the third quarter of 2012.
As of 30 September 2013, the backlog of orders in the Water Transmission segment was approximately US$108 million compared to a backlog of orders of US$241 million as of 30 September 2012. The backlog contains confirmed orders, including the balance of projects in process, and projects for which the company has been notified that it is the successful bidder even though a binding agreement has not been executed.
Outlook
"We believe the fourth quarter may be even more challenging than the third quarter. The Water Transmission segment is expected to have a similar amount of net sales, with expected gross margin in the mid-teens," said Scott Montross, president and chief executive officer of the company. "We have not yet seen any significant improvement in our oil country tubular goods business, therefore we expect to see gross margin in the low positive single-digits."
As previously announced, the company is in the process of exploring strategic alternatives for its oil country tubular goods business, which could include potential acquisitions, divestitures and joint-ventures. No decision has been made at this time to enter into any transaction and there can be no assurance that the exploration of alternatives will result in a transaction or as to the terms, conditions or timetable of any such transaction. It is the company's policy not to comment on any specific discussions or any potential corporate transaction unless and until it enters into a definitive agreement with respect to such transaction.
