Northwest Pipe Sees Pressure from Line Pipe Imports
11/04/2014 - Northwest Pipe Co. announced its financial results for the quarter ended 30 September 2014.
Third Quarter 2014 Results
Net sales from continuing operations for the quarter ended 30 September 2014 increased 48.4% to US$116.5 million compared to US$78.5 million for the quarter ended 30 September 2013. Gross profit was US$15.8 million (13.6% of net sales from continuing operations) in the third quarter of 2014, an increase from US$11.3 million (14.3% of net sales from continuing operations) in the third quarter of 2013. Income from continuing operations for the third quarter of 2014 was US$5.9 million or US$0.61 per diluted share compared to income from continuing operations of US$2.7 million or US$0.29 per diluted share for the third quarter of 2013.
Water Transmission sales increased 64.1% to US$76.9 million in the third quarter of 2014 from US$46.8 million in the third quarter of 2013. The increase in net sales was due to higher volumes primarily attributed to the IPL project, which started production in mid-May. Water Transmission gross profit increased to US$16.6 million (21.5% of segment net sales) in the third quarter of 2014 from US$7.9 million (16.9% of segment net sales) in the same quarter of 2013. Water Transmission gross profit increased in total and as a percent of net sales due to increased volume and the mix of projects as compared to the same period a year ago.
Tubular Products sales from continuing operations increased 25.1% to US$39.6 million in the third quarter of 2014 from US$31.7 million in the third quarter of 2013, driven by a 23% increase in tons sold coupled with a 2% increase in sales prices. Sales volumes increased from 32,400 tons in the third quarter of 2013 to 39,700 tons in the third quarter of 2014. Tubular Products had a gross loss from continuing operations of US$0.7 million (negative 1.9% of segment net sales from continuing operations) in the third quarter of 2014 compared to a US$3.3 million gross profit (10.5% of segment net sales from continuing operations) in the third quarter of 2013. Gross profit was negatively impacted by higher steel costs in relation to sales prices.
As of 30 September 2014, the backlog of orders in the Water Transmission segment was approximately US$138 million compared to a backlog of orders of US$108 million as of 30 September 2013. The backlog includes confirmed orders, including the balance of projects in process, and projects for which the Company has been notified that it was the successful bidder even though a binding agreement has not been executed.
Outlook
"The company's financial performance is expected to come under increasing pressure in the fourth quarter compared to the third quarter. The extremely aggressive bidding posture in the Water Transmission market is expected to drive margins into the low teens," said Scott Montross, president and chief executive officer of the company. "Even with the gains in efficiency and volume driven by our Atchison modernization project, we expect near term margins to be around break-even for the Tubular Products segment due to continued pressure from imports in the line pipe market."
Net sales from continuing operations for the quarter ended 30 September 2014 increased 48.4% to US$116.5 million compared to US$78.5 million for the quarter ended 30 September 2013. Gross profit was US$15.8 million (13.6% of net sales from continuing operations) in the third quarter of 2014, an increase from US$11.3 million (14.3% of net sales from continuing operations) in the third quarter of 2013. Income from continuing operations for the third quarter of 2014 was US$5.9 million or US$0.61 per diluted share compared to income from continuing operations of US$2.7 million or US$0.29 per diluted share for the third quarter of 2013.
Water Transmission sales increased 64.1% to US$76.9 million in the third quarter of 2014 from US$46.8 million in the third quarter of 2013. The increase in net sales was due to higher volumes primarily attributed to the IPL project, which started production in mid-May. Water Transmission gross profit increased to US$16.6 million (21.5% of segment net sales) in the third quarter of 2014 from US$7.9 million (16.9% of segment net sales) in the same quarter of 2013. Water Transmission gross profit increased in total and as a percent of net sales due to increased volume and the mix of projects as compared to the same period a year ago.
Tubular Products sales from continuing operations increased 25.1% to US$39.6 million in the third quarter of 2014 from US$31.7 million in the third quarter of 2013, driven by a 23% increase in tons sold coupled with a 2% increase in sales prices. Sales volumes increased from 32,400 tons in the third quarter of 2013 to 39,700 tons in the third quarter of 2014. Tubular Products had a gross loss from continuing operations of US$0.7 million (negative 1.9% of segment net sales from continuing operations) in the third quarter of 2014 compared to a US$3.3 million gross profit (10.5% of segment net sales from continuing operations) in the third quarter of 2013. Gross profit was negatively impacted by higher steel costs in relation to sales prices.
As of 30 September 2014, the backlog of orders in the Water Transmission segment was approximately US$138 million compared to a backlog of orders of US$108 million as of 30 September 2013. The backlog includes confirmed orders, including the balance of projects in process, and projects for which the Company has been notified that it was the successful bidder even though a binding agreement has not been executed.
Outlook
"The company's financial performance is expected to come under increasing pressure in the fourth quarter compared to the third quarter. The extremely aggressive bidding posture in the Water Transmission market is expected to drive margins into the low teens," said Scott Montross, president and chief executive officer of the company. "Even with the gains in efficiency and volume driven by our Atchison modernization project, we expect near term margins to be around break-even for the Tubular Products segment due to continued pressure from imports in the line pipe market."
