Exhibit 99.1
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| EARNINGS RELEASE | | October 19, 2006 |
NORTHWEST PIPE REPORTS QUARTERLY RESULTS;
RECORD SALES AND BACKLOG
Portland, Oregon, October 19, 2006. Northwest Pipe Company (NASDAQ: NWPX) today announced record quarterly sales of $92.4 million for the third quarter of 2006. “All three of our business groups increased their sales over the same period last year,” said Brian Dunham, president and chief executive officer. “In addition to the record sales recorded in the third quarter of 2006, our backlog at the end of the quarter was also at a record high of approximately $195 million. This is a 55% increase when compared to the third quarter last year.” Net income for the quarter was $4.1 million, or $0.57 per diluted share, compared to $4.0 million, or $0.56 per diluted share, in the third quarter of 2005.
Water Transmission
Sales in the Water Transmission Group were $65.5 million in the third quarter of 2006, compared to $61.8 million for the third quarter last year. The gross profit for this Group was $12.7 million, or 19.4% of sales, consistent with our results over the same period last year. “While our margin percentage was slightly below last year’s, it did trend up from the second quarter as expected. We anticipate a small improvement in margin again in the fourth quarter,” said Dunham.
Tubular Products
The Tubular Products Group’s sales were $22.3 million in the third quarter of 2006, compared to $20.5 million reported for the third quarter last year. Gross profit was $2.2 million for the quarter compared to $1.1 million in the third quarter of 2005. Gross profit as a percent of sales was 10.1% in the third quarter of 2006, compared to 5.3% for the same period in 2005.
Fabricated Products
The Fabricated Products Group generated sales of $4.7 million during the quarter compared to $4.5 million in the third quarter of 2005. Gross profit was $243,000 compared to $454,000 for the same quarter last year. “Gross profit decreased as pricing became more aggressive in our propane tank markets. We have completed the expansion of our Monterrey, Mexico facility and expect to start showing increasing sales and improving margins as we add new products to this Group later this year,” said Dunham.
Backlog and Outlook
The backlog at September 30, 2006 was $195 million. “Bidding activity in the third quarter for the Water Transmission Group was strong as expected and led to our record backlog. We expect fourth quarter bidding activity to continue to be very positive and production to continue at, or
slightly higher than, current levels into the fourth quarter and next year. Revenues in the fourth quarter, however, may decrease slightly from current results due to holidays and possible weather issues. If bidding activity continues as forecasted,” Dunham continued, “we should end the year with a new record backlog.”
Tubular products demand should continue to be steady through the end of the year. In spite of a normal shift in our product mix due to seasonality, we expect margins in the fourth quarter to be consistent with the third quarter. “The upgrade at our Atchison division is on track to be completed by the end of the year,” said Dunham. “We expect to start producing a broader range of energy products when this is completed, which will help drive our growth in 2007.”
About Northwest Pipe
Northwest Pipe Company manufactures welded steel pipe and other products in three business groups. Its Water Transmission Group is a leading supplier of large diameter, high-pressure steel pipe products that are used primarily for water infrastructure in North America. Its Tubular Products Group manufactures smaller diameter steel pipe for a wide range of construction, agricultural, energy, industrial and mechanical applications. Its Fabricated Products Group manufactures propane tanks and other fabricated products. The Company is headquartered in Portland, Oregon and has nine manufacturing facilities across the United States and Mexico.
Forward-Looking Statements
Statements in this press release by Brian Dunham and statements in the “Backlog and 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 503-946-1200 |
NORTHWEST PIPE COMPANY
STATEMENTS OF OPERATIONS
(Dollar and share amounts in thousands, except per share amounts)
| | | | | | | | | | | | | |
| | | Three Months Ended
September 30 | | Nine Months Ended
September 30 |
| | | 2006 | | 2005 | | 2006 | | | 2005 |
Net Sales: | | | | | | | | | | | | | |
Water Transmission | | $ | 65,481 | | $ | 61,747 | | $ | 172,771 | | | $ | 177,743 |
Tubular Products | | | 22,272 | | | 20,486 | | | 63,765 | | | | 62,932 |
Fabricated Products | | | 4,665 | | | 4,521 | | | 12,556 | | | | 11,263 |
| | | | | | | | | | | | | |
Net Sales | | | 92,418 | | | 86,754 | | | 249,092 | | | | 251,938 |
Cost of Sales: | | | | | | | | | | | | | |
Water Transmission | | | 52,756 | | | 49,038 | | | 140,057 | | | | 142,242 |
Tubular Products | | | 20,030 | | | 19,410 | | | 56,961 | | | | 58,972 |
Fabricated Products | | | 4,422 | | | 4,067 | | | 11,596 | | | | 10,563 |
| | | | | | | | | | | | | |
Total Cost of Sales | | | 77,208 | | | 72,515 | | | 208,614 | | | | 211,777 |
Gross Profit: | | | | | | | | | | | | | |
Water Transmission | | | 12,725 | | | 12,709 | | | 32,714 | | | | 35,501 |
Tubular Products | | | 2,242 | | | 1,076 | | | 6,804 | | | | 3,960 |
Fabricated Products | | | 243 | | | 454 | | | 960 | | | | 700 |
| | | | | | | | | | | | | |
Gross Profit | | | 15,210 | | | 14,239 | | | 40,478 | | | | 40,161 |
Selling, General and Administrative | | | 6,989 | | | 6,633 | | | 20,298 | | | | 19,166 |
Gain on Sale of Asset | | | — | | | — | | | (7,674 | ) | | | — |
| | | | | | | | | | | | | |
Operating Income | | | 8,221 | | | 7,606 | | | 27,854 | | | | 20,995 |
Interest Expense | | | 1,832 | | | 1,897 | | | 5,320 | | | | 5,499 |
| | | | | | | | | | | | | |
Income Before Income Taxes | | | 6,389 | | | 5,709 | | | 22,534 | | | | 15,496 |
Provision for Income Taxes | | | 2,310 | | | 1,733 | | | 8,494 | | | | 5,501 |
| | | | | | | | | | | | | |
Net Income | | $ | 4,079 | | $ | 3,976 | | $ | 14,040 | | | $ | 9,995 |
| | | | | | | | | | | | | |
Basic Earnings per Share | | $ | 0.59 | | $ | 0.58 | | $ | 2.05 | | | $ | 1.48 |
| | | | | | | | | | | | | |
Diluted Earnings per Share | | $ | 0.57 | | $ | 0.56 | | $ | 1.97 | | | $ | 1.42 |
| | | | | | | | | | | | | |
Shares Used in Per Share Calculation: | | | | | | | | | | | | | |
Basic | | | 6,866 | | | 6,822 | | | 6,854 | | | | 6,762 |
| | | | | | | | | | | | | |
Diluted | | | 7,162 | | | 7,112 | | | 7,139 | | | | 7,050 |
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NORTHWEST PIPE COMPANY
SELECTED BALANCE SHEET AND OTHER DATA
(Dollar amounts in thousands)
| | | | | | | | |
| | | September 30,
2006 | | | December 31,
2005 | |
Assets: | | | | | | | | |
Cash and Cash Equivalents | | $ | 99 | | | $ | 133 | |
Trade and Other Receivables, Net | | | 67,056 | | | | 64,538 | |
Cost and Estimated Earnings in Excess of Billings on Uncompleted Contracts | | | 67,701 | | | | 73,161 | |
Inventories | | | 66,273 | | | | 51,070 | |
Other Current Assets | | | 3,716 | | | | 7,435 | |
| | | | | | | | |
Total Current Assets | | | 204,845 | | | | 196,337 | |
Property and Equipment, Net | | | 133,574 | | | | 117,369 | |
Other Assets | | | 25,532 | | | | 24,779 | |
| | | | | | | | |
Total Assets | | $ | 363,951 | | | $ | 338,485 | |
| | | | | | | | |
Liabilities: | | | | | | | | |
Current Maturities of Long-Term Debt | | $ | 9,571 | | | $ | 9,361 | |
Accounts Payable | | | 48,092 | | | | 28,914 | |
Accrued Liabilities | | | 9,491 | | | | 7,634 | |
| | | | | | | | |
Total Current Liabilities | | | 67,154 | | | | 45,909 | |
Long-Term Note Payable to Financial Institution | | | 34,589 | | | | 41,353 | |
Other Long-Term Debt, Less Current Maturities | | | 53,018 | | | | 53,578 | |
Other Liabilities | | | 34,893 | | | | 38,180 | |
| | | | | | | | |
Total Liabilities | | | 189,654 | | | | 179,020 | |
Stockholders’ Equity | | | 174,297 | | | | 159,465 | |
| | | | | | | | |
Total Liabilities and Stockholders’ Equity | | $ | 363,951 | | | $ | 338,485 | |
| | | | | | | | |
Other Data: | | | | | | | | |
Working Capital | | $ | 137,691 | | | $ | 150,428 | |
Capital Expenditures | | | 20,600 | | | | 18,502 | |
Depreciation and Amortization | | | 2,751 | | | | 5,451 | |
Debt as a Percent of Capitalization | | | 35.8 | % | | | 39.5 | % |
