EXHIBIT 99.1
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EARNINGS RELEASE | | July 27, 2004 |
NORTHWEST PIPE REPORTS IMPROVED
SECOND QUARTER 2004 RESULTS
Portland, Oregon, July 27, 2004…Northwest Pipe Company (NASDAQ: NWPX) today reported its results for the second quarter of 2004. Sales were $69.6 million compared to $61.5 million in the second quarter of 2003. The company reported quarterly net income of $3.0 million, or $0.45 per diluted share, compared to $437,000, or $0.06 per diluted share, in the second quarter of 2003. “Our second quarter results showed marked improvement from the same period last year, as well as from the first quarter of 2004,” said Brian Dunham, chief executive officer. “The improvement in the economy has resulted in improved market conditions for tubular products. Bidding activity in water transmission is also strong. We continue to be optimistic that the second half of 2004 will show improvement over our first half results.”
Water Transmission
Sales in the Water Transmission Group were $37.6 million in the second quarter of 2004, compared to $36.7 million for the second quarter of last year. The gross profit for this Group was $7.2 million, or 19.2% of sales, compared to $7.4 million, or 20.3% of sales, last year. The decrease is primarily due to the impact of increased steel costs on orders in process during the quarter.
Tubular Products
The Tubular Products Group’s sales improved significantly to $32.0 million in the second quarter of 2004 compared to $24.8 million reported for the second quarter last year. Gross profit was $4.6 million in the second quarter of 2004 compared to $383,000 in the second quarter of 2003. Gross profit as a percent of sales was 14.5% for the quarter, compared to 1.5% in the same quarter of 2003.
“As anticipated, the improvement in the tubular products market continued through the second quarter of 2004,” Dunham reported. “The improvement in revenue and gross profit resulted primarily from higher prices, while overall demand continued to be positive.”
Outlook
Water transmission bidding activity continued at a strong level through the second quarter of 2004. As a result, backlog exceeded $100 million for the first time since the third quarter of 2001. Backlog increased from $83.8 million at the beginning of the second quarter of 2004 to $101.9 million at the end of the quarter. “We continue to track a large number of jobs that are scheduled to bid in 2004 and continue to expect the total 2004 market to substantially exceed the 2003 market,” said Dunham.
“Production began to ramp-up in June to support the improved backlog. The benefits of increased capacity utilization is expected to result in improvement in revenue and gross profit in the second half of 2004 compared to the first half.”
Demand in the Tubular Products Group is expected to remain near current levels through the third quarter and then decrease somewhat in the fourth quarter due to normal seasonality. Profitability in this Group is heavily impacted by steel costs. The uncertainty of future steel costs make forecasting gross profit for the remainder of 2004 very difficult. “As steel costs continue to rise,” said Dunham, “the key to our earnings is our ability to pass on increases to our customers. At this time, the market appears to be strong enough to absorb these increases and allow us to maintain our profitability.”
About Northwest Pipe
Northwest Pipe Company manufactures welded steel pipe in two business segments. Its Water Transmission Group is a leading supplier of large diameter, high-pressure steel pipe products that are used primarily for water transmission in the United States and Canada. Its Tubular Products Group manufactures smaller diameter steel pipe for a wide range of construction, agricultural, energy, industrial and mechanical applications. The company is headquartered in Portland, Oregon and operates eleven manufacturing facilities across the United States and Mexico.
Forward-Looking Statements
Statements in this press release by Brian Dunham and statements in the “Outlook” section of this press release are “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as expects, anticipates, intends, plans, believes, sees, estimates and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements reflect management’s current views and estimates of future economic and market circumstances, industry conditions, company performance and financial results. Actual results could vary materially from the description contained herein due to many factors, including project delays, changes in bidding activity, market demand, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, competitive environment, and other risks described from time to time in the company’s reports to the Securities and Exchange Commission. The forward-looking statements we make today speak only as of today and we do not undertake any obligation to update any such statements to reflect events or circumstances occurring after today.
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CONTACT: | | Brian Dunham |
| | Chief Executive Officer |
| | 503-382-2332 |
NORTHWEST PIPE COMPANY
STATEMENTS OF OPERATIONS
(Dollar and share amounts in thousands, except per share amounts)
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| | Three Months Ended June 30
| | Six Months Ended June 30
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| | 2004
| | 2003
| | 2004
| | 2003
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Net Sales: | | | | | | | | | | | | | |
Water Transmission | | $ | 37,615 | | $ | 36,713 | | $ | 73,912 | | $ | 71,971 | |
Tubular Products | | | 32,020 | | | 24,816 | | | 62,445 | | | 47,218 | |
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Net Sales | | | 69,635 | | | 61,529 | | | 136,357 | | | 119,189 | |
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Cost of Sales: | | | | | | | | | | | | | |
Water Transmission | | | 30,388 | | | 29,276 | | | 60,043 | | | 57,068 | |
Tubular Products | | | 27,375 | | | 24,433 | | | 56,014 | | | 47,767 | |
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Total Cost of Sales | | | 57,763 | | | 53,709 | | | 116,057 | | | 104,835 | |
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Gross Profit (Loss): | | | | | | | | | | | | | |
Water Transmission | | | 7,227 | | | 7,437 | | | 13,869 | | | 14,903 | |
Tubular Products | | | 4,645 | | | 383 | | | 6,431 | | | (549 | ) |
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Gross Profit | | | 11,872 | | | 7,820 | | | 20,300 | | | 14,354 | |
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Selling, General and Administrative | | | 5,349 | | | 5,818 | | | 10,604 | | | 11,558 | |
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Operating Income | | | 6,523 | | | 2,002 | | | 9,696 | | | 2,796 | |
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Interest Expense | | | 1,571 | | | 1,283 | | | 2,879 | | | 2,600 | |
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Income Before Income Taxes | | | 4,952 | | | 719 | | | 6,817 | | | 196 | |
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Provision for Income Taxes | | | 1,906 | | | 282 | | | 2,624 | | | 77 | |
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Net Income | | $ | 3,046 | | $ | 437 | | $ | 4,193 | | $ | 119 | |
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Basic Earnings per Share | | $ | 0.46 | | $ | 0.07 | | $ | 0.64 | | $ | 0.02 | |
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Diluted Earnings per Share | | $ | 0.45 | | $ | 0.06 | | $ | 0.63 | | $ | 0.02 | |
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Shares Used in Per Share Calculation: | | | | | | | | | | | | | |
Basic | | | 6,605 | | | 6,549 | | | 6,588 | | | 6,549 | |
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Diluted | | | 6,726 | | | 6,649 | | | 6,702 | | | 6,655 | |
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