PW Eagle (PWEI) 8-K PW Eagle Reports Second Quarter Earnings

Exhibit 99.1

FOR:	PW Eagle, Inc.
	222 South Ninth Street, Suite 2880
	Minneapolis, MN 55402
	(Nasdaq-NMS: “PWEI”)
	CONTACT: William H. Spell
	Chief Executive Officer, PW Eagle, Inc.
	612/305-0339

PW EAGLE REPORTS SECOND QUARTER EARNINGS

Second Quarter Fiscal 2003 Results Conference Call and Webcast Scheduled for

Monday, August 11, 2003 at 10:00 a.m. Central Time

MINNEAPOLIS — August 8, 2003— PW Eagle, Inc. (Nasdaq-NMS: “PWEI”) today reported its financial results for the three and six month periods ended June 30, 2003. The results of the first six months as reported include the results of operations for the recently acquired Uponor ETI (now Extrusion Technologies, Inc., or ETI) from March 14, 2003, the date of acquisition. A summary of the unaudited consolidated results for the three and six month periods ending June 30, 2003 and 2002 is set forth in the following table:

Consolidated Income Statement Information

(In thousands, except for per share amounts)

	Three months ended June 30,					Six months ended June 30,
	2003			2002		2003			2002
Net sales	$	85,789		$	76,380	$	156,355		$	129,484
Gross profit		12,776			18,399		23,876			24,661
Net income (loss)		(852	)		3,166		(1,408	)		531
Adjustments to reconcile to EBITDA:
Interest		3,043			2,794		5,631			5,798
Taxes		(545	)		1,965		(890	)		329
Depreciation		3,169			2,247		5,554			4,505
Amortization		144			0		161			0
EBITDA		4,959			10,172		9,048			11,163
Basic income (loss) per share	$	(0.12	)	$	0.47	$	(0.21	)	$	0.08
Diluted income (loss) per share	$	(0.12	)	$	0.33	$	(0.21	)	$	0.06

Included in the information reported above for the three month period ending June 30, 2003, is a non-cash inventory write down of approximately $2.1 million based upon reducing the value of our inventory to the lower of cost or market, reducing our reported EBITDA by a corresponding amount and resulting in our reporting a loss for the second quarter.

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PW Eagle also reported pro forma financial information assuming that its March 14, 2003 acquisition of ETI took place on January 1, 2002. The pro forma financial information includes certain adjustments to reflect what the Company will experience on an ongoing basis. A summary of the unaudited pro forma financial information for the three and six month periods ending June 30, 2003 and 2002, and the year ended December 31, 2002 is set forth in the following table:

Pro Forma Consolidated Income Statement Information

(In thousands, except for per share amounts)

	Three months ended June 30,					Six months ended June 30,						Year ended Dec. 31,
	2003			2002		2003			2002			2002
Net sales	$	85,789		$	105,070	$	177,046		$	177,220		$	340,765
Gross profit		13,200			24,309		27,631			32,149			60,801
Net income (loss)		(590	)		3,905		(1,169	)		(49	)		(82	)
Adjustments to reconcile to EBITDA:
Interest		3,043			3,231		5,954			6,644			12,597
Taxes		(383	)		2,549		(726	)		(32	)		(52	)
Depreciation		3,169			3,231		6,215			6,472			12,488
Amortization		144			226		370			452			904
EBITDA		5,383			13,142		10,644			13,487			25,855
Basic income (loss) per share	$	(0.09	)	$	0.58	$	(0.17	)	$	(0.01	)	$	(0.01	)
Diluted income (loss) per share	$	(0.09	)	$	0.41	$	(0.17	)	$	(0.01	)	$	(0.01	)

William H. Spell, PW Eagle CEO, stated, “The PVC pipe industry as a whole experienced a significant slowdown in demand and reduction in selling prices during the second quarter. We believe the reduction in demand for PVC pipe was due to poor weather that deferred construction activity, an unsettled economy and the high levels of inventory at distributors resulting from their heavy purchases in the first quarter as pipe prices increased. In addition, PVC pipe and resin prices peaked in April and then began to decrease, further discouraging distributors from purchasing pipe products in expectation of lower future pipe prices. PW Eagle and its subsidiary, Extrusion Technologies, Inc. experienced a reduction in demand for pipe in the second quarter when compared to both the first quarter of 2003 and the second quarter of the prior year.” Mr. Spell continued, “We are disappointed with the results of the second quarter. As a result of poor industry conditions, we have, and are continuing to take action to mitigate the impact of this slowdown, including curtailing production and instituting cost control measures.”

PW Eagle was in violation of certain financial institution loan covenants as of June 30, 2003. The financial institutions have since waived the condition of non-compliance with these covenants. Under the current business conditions and debt structure, it is likely that the Company will be in violation of these same covenants in future periods, and, therefore must reclassify a portion of its long term debt from long term to current as of June 30, 2003. It is also likely under current business conditions and debt structure, that the Company will be in violation of financial covenants with other financial institutions in future periods.

Mr. Spell continued, “We are working diligently during this difficult time to strengthen our balance sheet, deleverage the Company and improve our operating results. In July, we entered into an agreement to sell our idled plant and property in Phoenix, Arizona for $2.5 million and expect to complete the sale during the third quarter. In addition, we have entered into discussions with our lenders to develop plans to further strengthen our balance sheet and to ensure compliance with all financial covenants on September 30, 2003. We continue to identify synergies and cost savings

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resulting from our acquisition of ETI and are accelerating our efforts to capture these benefits and becoming a more effective and efficient producer and marketer of plastic pipe products.”

Looking ahead, Mr. Spell said, “We believe that demand for our products in the third quarter will improve over the second quarter of this year and the third quarter of 2002 as demand for pipe increases due to improved weather and an improving economy. We also believe our distributors have lowered their inventories and will begin to purchase product at a rate that reflects the actual demand for our products. However, we believe our margins will remain depressed until pipe prices increase. We will continue to manage costs and seek ways of enhancing sales of our high margin products. For the remainder of 2003 we expect to experience the normal seasonality in our business and our results will be highly dependent on the performance of the economy as a whole and particularly within our market areas.”

Second Quarter 2003 Webcast & Conference Call

PW Eagle will hold its second quarter 2003 webcast and conference call onMonday, August 11, 2003 at 10:00 a.m. Central Time to discuss the Company’s performance for the second quarter and first six months of 2003. The conference call will be available live on the Internet atwww.pweagleinc.com. The call will also be archived at that location for one week following its original webcast.The conference calltelephone number is 1-800-289-0495. Use 122978 as the confirmation code to access the call and please call a few minutes before thebeginning of the call.

About the Company

PW Eagle, Inc. is a leading producer of PVC pipe and also produces polyethylene pipe and water meter boxes. The Company operates thirteen manufacturing facilities in the United States. PW Eagle’s common stock is traded on the Nasdaq National Market under the symbol “PWEI.”

Information Available on our Website

This press release and our periodic reports filed with or furnished to the Securities and Exchange Commission are available on our website atwww.pweagleinc.com under the heading “Investor Relations.”

THIS PRESS RELEASE CONTAINS FORWARD-LOOKING INFORMATION AND ACTUAL RESULTS MAY DIFFER

Statements that PW Eagle, Inc. may publish, including those in this announcement that are not strictly historical are “forward looking” statements made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements made in this press release, particularly those made by William H. Spell, regarding the Company’s expectations that: (i) demand for PW Eagle products in the third quarter will improve over the second quarter of this year and the third quarter of 2002 as demand for pipe increases due to improved weather and an improving economy; (ii) PW Eagle’s distributors have lowered their inventories and will begin to purchase product at a rate that reflects the actual demand for PW Eagle’s products; (iii) PW Eagle’s margins will remain depressed until pipe prices increase; and (iv) for the remainder of 2003, PW Eagle expects to experience the normal seasonality in its business and its results will be highly dependent on the performance of the economy as a whole and particularly within its market areas are “forward looking” statement which involves known and unknown risks and uncertainties that may cause the actual results to differ materially from those expected and stated in this announcement. Actual results could differ if the economy and particularly the segments of the economy that impact the Company’s business do not grow and perform at least as well as forecast. In addition, actual results could differ as a result of: (i) a slowdown in the United States economy; (ii) the failure of the Gross Domestic Product to improve during the second half of 2003; (iii) an increase in interest rates; (iv) a decline in the construction of commercial and residential building; (v) a decline in our raw material

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prices; and (vi) a greater supply of PVC and PE pipe than market demand for such products caused by cyclical fluctuations in the supply and demand for pipe. In addition, there is no assurance that the Company will be successful in obtaining waivers from its financial institutions upon default of any of its financial covenants. It is not possible to foresee or identify all factors that could cause actual results to differ from expected or historical results. As such, you should not consider any list of such factors to be an exhaustive statement of all risks, uncertainties or potential inaccurate assumptions. We undertake no obligation to update “forward-looking” statements. In addition, the use of the term “EBITDA” is not intended to be an alternative to the financial results under generally accepted accounting principles in the United States of America.

- financials follow -

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PW EAGLE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(In thousands, except per share amounts)

	Three months ended June 30,					Six months ended June 30,
	2003			2002		2003			2002
NET SALES	$	85,789		$	76,380	$	156,355		$	129,484
COST OF GOODS SOLD		73,013			57,981		132,479			104,823
Gross profit		12,776			18,399		23,876			24,661
OPERATING EXPENSES:
Selling expenses		8,334			7,523		14,923			13,279
General and administrative expenses		2,811			2,897		5,631			4,994
		11,145			10,420		20,554			18,273
OPERATING INCOME		1,631			7,979		3,322			6,388
NON-OPERATING EXPENSES (INCOME):
Interest expense		3,043			2,794		5,631			5,798
Other, net		(15	)		54		(11	)		(270	)
		3,028			2,848		5,620			5,528
INCOME (LOSS) BEFORE INCOME TAXES		(1,397	)		5,131		(2,298	)		860
INCOME TAX EXPENSE (BENEFIT)		(545	)		1,965		(890	)		329
NET INCOME (LOSS)	$	(852	)	$	3,166	$	(1,408	)	$	531
INCOME (LOSS) PER COMMON SHARE:
Basic	$	(0.12	)	$	0.47	$	(0.21	)	$	0.08
Diluted	$	(0.12	)	$	0.33	$	(0.21	)	$	0.06
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic		6,848			6,714		6,834			6,709
Diluted		6,848			9,512		6,834			9,371

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PW EAGLE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except for shares and per share amounts)

	June 30, 2003			December 31, 2002
ASSETS	(Unaudited)
CURRENT ASSETS:
Cash and cash equivalents	$	1,663		$	337
Accounts receivable, net		33,946			19,202
Inventories		60,308			38,917
Deferred income taxes		1,455			1,455
Other, principally assets held for sale		4,314			650
Total current assets		101,686			60,561
Property and equipment, net		69,825			58,899
Goodwill		3,651			3,651
Intangible assets		4,720			—
Other assets		7,734			10,291
TOTAL ASSETS	$	187,616		$	133,402
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Borrowings under revolving credit facility	$	45,886		$	15,036
Current maturities of long-term debt		17,214			3,027
Accounts payable		26,918			9,344
Book overdraft		4,302			10,310
Accrued liabilities		10,516			9,224
Total current liabilities		104,836			46,941
Other long-term liabilities		9,018			1,817
Long-term debt, less current maturities		3,964			14,750
Financing lease obligation, less current maturities		13,062			13,105
Senior subordinated debt		30,982			30,870
TOTAL LIABILITIES		161,862			107,483
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS’ EQUITY:
Series A preferred stock; 7% cumulative dividend; convertible; $2 per share liquidation preference; no par value; 2,000,000 shares authorized; none issued and outstanding		—			—
Undesignated stock, $.01 par value; 14,490,000 shares authorized; none issued and outstanding		—			—
Stock warrants		6,936			6,296
Common stock; $.01 par value; 30,000,000 shares authorized; issued and outstanding 7,178,850 and 7,002,950 shares, respectively		72			70
Class B Common stock, $.01 par value; 3,500,000 shares authorized; none issued and outstanding		—			—
Additional paid-in capital		31,074			30,488
Unearned compensation		(995	)		(920	)
Notes receivable from officers and employees on common stock purchases		(835	)		(835	)
Accumulated other comprehensive income		164			74
Retained earnings (accumulated deficit)		(10,662	)		(9,254	)
Total stockholders’ equity		25,754			25,919
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	187,616		$	133,402

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