Vancouver-based water transmission company Northwest Pipe released its 2019 fourth-quarter and end-of-year results late Monday, reporting that it had achieved its highest quarterly gross profit since 2013. The news follows a string of highly successful quarters for the company.
“The strong demand levels, elevated backlog and stable competitive landscape that we experienced throughout 2019 led to a fourth quarter that had the highest gross margin since 2013 and a full year that had revenue and gross profit that was close to historical highs,” CEO Scott Montross said in a Tuesday morning conference call with investors.
Net sales for the fourth quarter were reported at $72.2 million, a 25.5 percent increase over the fourth quarter of 2018, with gross profit at $16.9 million, a 149.4 percent year-over-year jump. Unadjusted net income per diluted share was $1.22 compared with $0.02 in the fourth quarter of 2018.
In 2019 overall, the company achieved its highest annual gross profit since 2008. Net sales were $279.3 million, a 62.3 percent jump from 2018, and gross profit was $47.2 million, an increase of 290.1 percent over 2018.
“The sales increase was due to a significant increase in tons produced, partially offset by a decrease in selling prices per ton that occurred with a change in product mix,” chief financial officer Robin Gantt said on the investor call.
The company also recovered another $1.3 million in insurance payments stemming from a fire last year that destroyed a warehouse at the company’s Saginaw, Texas, facility, Gantt said. The company still has another $1.6 million in costs from the fire that it’s seeking to recover, she said, but the facility itself has been rebuilt and operational since October.
Northwest Pipe concluded 2019 with a $258 million backlog of project contracts, compared with $252 million at the end of 2018, which Montross characterized as a year-end record for the backlog.
“The big thing about the backlog is when we talk about a backlog over $200 million, when you date it back to 2011, before the last part of 2018 there were only two or three quarters that we had $200 million in backlog,” he said. “Well, right now we’ve had $200 million-plus for the last six quarters, and we see that going forward all the way through 2020.”
During the investor call, Montross placed significant emphasis on the company’s push into the precast concrete pipe market, starting with Northwest Pipe’s $49.4 million acquisition of concrete pipe manufacturer Geneva Pipe Co. Inc. in late January.
Northwest Pipe traditionally specializes in manufacturing spiral-welded steel pipe used for water transmission infrastructure, typically “raw” water on its way to a treatment plant and treated water on its way out to consumers.
The company has been growing in that industry, Montross said, such as with the acquisition of Ameron Water Transmission Group two years ago, but the opportunities for further growth are limited.
“We now have approximately 50 percent of the steel pressure pipe market,” he said.
That’s where Geneva comes in, Montross said. The ability to manufacture precast concrete pipe will allow Northwest Pipe to branch out into other pipe markets with more growth opportunities. Precast concrete pipes are often used in sewer and stormwater systems.
Looking to 2020, Montross cautioned that the first quarter is generally the time of year when the business is most susceptible to customer delays and weather impacts. Some projects have already been pushed out to the second quarter, he said, so the company expects the backlog to shrink in the first quarter, but remain relatively high.
Montross said the company also expects to bring in several million dollars in revenue from the Geneva Pipe side of the business during the first quarter.
Montross also briefly discussed Northwest Pipe’s major current project contracts and upcoming bidding opportunities such as the Bois d’Arc Lake project in Texas, the Navajo-Gallup Water Supply project in New Mexico and a variety of California projects funded by Proposition 1, a $7.5 billion water infrastructure bond that the state passed in 2014.
“The bidding volumes look to continue to be strong in 2020,” Montross said.
Northwest Pipe’s stock, which trades under the symbol NWPX, fell 4.56 percent on Tuesday to close at $1.51, although the loss came in the midst of an overall downtown in financial markets sparked by investor fears about the impact of the novel coronavirus outbreak.
Anthony Macuk: 360-735-4547; anthony.macuk@columbian.com; twitter.com/anthonymacuk
