NWPX - Earnings call transcript Q3 2019

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Operator

Welcome and thank you for standing by. [Operator Instructions] Now I will turn the meeting over to Scott Montross, CEO of Northwest Pipe.

You may begin.

Scott Montross

Thank you, Donna. Good morning and welcome to Northwest Pipe’s conference call. Montross. Scott is name My I am company. of and CEO the President Chief Robin I by our Financial am joined Gantt, Officer.

differ call actual for begin, for Form remind and to that factors this our everyone risk we actual a that our results As I materially. could materially SEC that statements discussion we would results could most from make of Please forward-looking recent future expectations. XX-K are the like to differ to about cause statements expectations refer in on filing

turn will our I who third quarter to now Robin will results. discuss

Robin Gantt

Thank you, Scott.

$X.X Our the to was XXXX offset or the third third ton adjusted were third product third of the per quarter in XXXX. a with profit net decrease XXXX net third of adjusted of occurred in quarter in was due per income $X.X compared Sales to was partially in quarter third as significant share share the million or prices $XX.X selling XXXX. million in in in $X.XX a million XX.X% that quarter a diluted $XX.X diluted in income compared XXXX. million $X.XX of an the X.X% to increase of mix. sales tons quarter quarter sales change to increase produced, percent a by The Gross per of compared of

sales the increases with improved in gross of Gross percent and volumes. a profit as profit production

gross the is percent quarter net of have the addition, benefit If which XXXX. incurred the In proceeds, exclude fire facility. in a Saginaw of been of the since net expenses our we third these as would $XXX,XXX proceeds, insurance best related XX.X%, our at we in sales quarter to received profit the

cost that the recall $X.X You we in additional will million had second quarter. of

through of year-to-date us the XX%. the impact is margin margins $X.X million, on gives gross of the September a which about end net of gross So fire

offset hopefully fourth proceeds have We but also will the we to additional the will have remaining additional insurance quarter, costs cost. in

in and quarter of general XXXX. to increased compensation in to to decrease decreased which quarter related in This third expense. the costs offset XXXX of third administrative million the due quarter $X.X by acquisition partly Ameron, million were of incentive of nonrecurring primarily third the cost Selling, $X.X from XXXX the was

quarter Our excludes our settlement pipe XX.X% to third $X.X quarter after compared of tax tax million tubular adjusted at a net third rate product we in XX% legal facilities. rate an XXXX. income had our related XXXX about for We of produced former to of received income the of in the

impacted and of tax in the was XXXX foreign of June valuation related in certain credit changes rate estimated the issuance to allowance the transition final aspects by XXX Our by Section the regulations tax.

of months $X.X expenditures. and operations. in which maintenance months the ongoing X XXXX, capital of first X months the months first of were first X XXXX X of from $XX.X the in amortization the million Capital were cash Depreciation $X.X continuing XXXX, million company first $X expenditures the were for In in provided and million in XXXX. million

for XXXX, expenditures of the maintenance and spending includes Saginaw. about We capital most in and capital have building falls million $XX equipment planned which total in under replacement

Scott Now update turn business. an over I our for it on will to

Scott Montross

backlog the second quarter XX, at third the $XXX levels, in backlog to September near-record including million in orders our of XXXX. As quarter XXXX, compared million of remained confirmed $XXX $XXX and was million

coating which ended facility in earlier period to rebuild is into expect bit slower completed we move similar where of very our elevated by end was The drift bidding the we and XXXX, XXXX to the of levels. October. standards historical the year a fire-related As lower we backlog Saginaw

led margin. to that profit gross significant customer are backlog landscape and improvement profit we’ve strong The XXXX improvement quarter schedule. gross third a shown levels, demand on processing currently back stable and a and have we in that’s coating and competitive are We in elevated orders, experienced strong normal revenue throughout

to We holiday that revenues by only lower be expect into weather the fourth of can time schedules. quarter slightly affected move be and as the year we

fairly margin expect we levels stable. However, to remain

There we tons to lake The stated tons quarter. been expenses Construction tons expected next that the in project of we in project representing insurance projects. In additional that is transmission the SWIFT XXXX As stages engineered program the pipe. couple $X surface production Pipe This project market, on pipe the The to the expected Houston steel upcoming segments X,XXX the was billion pre-manufacturing anomalies begin funded water current the from into a and projects the to has recently continue is XX,XXX XX,XXX in of production Texas selected Authority, Garney major reimbursements program Northwest successful are series of of for previous project the Water the is bid Houston Houston a X look Saginaw over represents over at over the have segments earnings bidder water quarters timing to Pipe The supply pipe. XX,XXX with will of tons of about expect from the coating d’Arc of are North pipe. calls, individual multiyear, the Fear major various pipe years. related through of has projects the last multiple and of well project Bois at segments, of XX-inch to ship represent and Northwest segments, fund in fire plant. Houston representing Utility by XX complete. multiagency future. like to Public a Carolina. new SWIFT Cape with to in miles Raw fourth main late following

The in XX,XXX which of Water Pipe. pipe. approximately this successful finished project, of project in line, d’Arc currently for District XXXX Bois awarded the awarded we bid has in water a was XX,XXX Raw were bidder Texas begun and tons represent project representing pipe a XX,XXX tons production. XXXX, the tons Municipal are North Water by for portion of June and to of lake quarter the approximately of fourth Bois stages on Northwest represents construction segments d’Arc was line The Pipe the of that Northwest lake various

will much-needed year. created prop market, has We the for production state. for bond funding the California In water the $X.X infrastructure Western X projects begin late this billion within the

According to the have of Agency, as those of fiscal year. XX% funds been California Natural for Resources projects various the appropriate XXXX-XXXX

received progress the has one. XX stretch of is ton rehabilitation project, prop River funding The has be will involve tons reuse program The the over about next a XXX-inch representing funding over years. on year, an on water diversion as XXXX. for for flood expect from activity Red have which miles bidding water next these several for the It In The with priority. annually pipeline. we This slowed Water in project to We in next years. North storage to in urgent X over competing California requirements continue XX,XXX out begin project to new will XXX-mile to result programs generated reservoir opportunities to see Dakota, expect is site’s it projects is the PCCP the X,XXX that which Valley tons. projected Project, market, XX,XXX X Supply taking appears

Mexico. will over is most within year. recent scheduled supply We in start next Northwest on pipe. was start which project this represents the of X,XXX are the mid-November. major to Production Navajo-Gallup multi-phased to hopeful Pipe bidding phase, a in project sometime tons that selected New is underway

territory. near Throughout year to record XXXX, backlog a bidding seen hover bidding continues in have a we solid stable of volume, a that terms in and environment

progressed As XXXX. we should strength multiyear programs, we the through substantial backlog continued a the result, have term, portion And have into as strong a see because in for and revenues we near to work of bidding the have XXXX. beyond margins seen business that continued expect conditions currently positive which translate to improve continued represents

one, be improving three, margin move focusing strategic and we water business driving of and efficiencies opportunities levels volume; performance company; all by infrastructure forward, over of growth we for on the As reductions finding the our will cost on: business. two, at focused

be any At we to your answer questions. this would time, of happy

Operator

line Brent from question Thielman comes D.A. first Our of Instructions] the [Operator of Davidson.

Brent Thielman

morning. Congratulations Good a on quarter. Thanks. great

Scott Montross

Brent. morning, Good you. Thank

Brent Thielman

I volume. of guess guess I the growth first majority question vast obviously, driven by

to of seeing or impact the whether where have change price high any the that’s are mix due margins headed be would the in And were changing? adverse you might on mentioned how you Can that talk despite quarter? decline in in about You per that ton kind these mix. then they

Scott Montross

we of timing I Yes, that on spiral of the mix come look earnings in based it’s on and think the when matter specifically the a the mills. specific price at call, months tons the you that off report

and levels these moving levels, producing Brent, you higher. looking can lot downstream that have and XXXX, of the relatively processing, see has of other Houston a a we’re going look on high the phase XXXX on spiral And up. and is where really at at looks levels are be tons lower. we So effect just to what you a like month when a spiral of a mill Bois Conversely, off somewhat projects, the that’s lot if d’Arc in and tons of we’re have processing, you if has going you downstream the through these that projects of that the mill. price pricing pricing and a when what you are few still year-over-year, at without a we’ve a significantly lot happen We see to pricing now kind booked of versus processed tons lot month price look

hot-rolled we as the toward between increase the the and are think continuing levels. starting coil the coil pipe price is other see price is moderates price thing back spread to I normal that that to

on was knows, huge everybody was a coil the effect had really price in it mid-$XXX coil XXX where the range. As hot-rolled announced, when driving-up

back relatively in getting a range. $XXX are the levels you normal Now to where ton down it’s

margins. increase positive on So has coil selling between obviously on hot-rolled an and which pipe that market or additional continues price, the spread to the the price that impact

matter So, the we you but still at increasing coil see between you at when we the that are the we facilities, that looking the in hot-rolled up report of overall we is timing the and spread moving pricing running pipe pricing and when mix look see price. are prices and

Brent Thielman

Okay. did the backlog or through they is legacy behind prior now? associated you to did you work deal when or burn any Ameron Scott, bid And with you that the

Scott Montross

There through. not we getting that of is being There that lot a of still that whole bit left. a is now done are little

think of backlog very we into now resulted that’s which these to have we margins is calls, last starting we in the been ultimately has over bidding in year the I the backlog. we about seen are have really from that the get talking what solid say would the meat that

Brent Thielman

through you schedules maybe bid about look like talk sounds it look you don’t about market you I can for end, early guess, this know more I you XXXX up And for how of how year know and will kind burn of provide into an of Okay. are the backlog sort XXXX. thinking year? shaping outlook, for don’t schedules next I but how the is

Scott Montross

first – being down at But by very affected look period expect looking be at what the of We because right seeing into weather-related. much. schedules can quarter, the bit that’s Yes. now move again, affected you holiday are little and doesn’t by have where fourth down year a a we we it

demand As similar XXXX even we far year looks demand a saw total upside to me year we look in concerned. a very excuse the as pretty XXXX, into as little we maybe similar bit are potential are XXXX far we as looks of with seeing into that a – out what is as seeing that

this that have the and So is got because, but of a second by the quarter fluctuate we as what know, historical of going based third that more what see on quarter, a a early bidding standards will you in through slower elevated I going go backlog is then specific quarter. the remains year and think And as usually year, see are it’s the first we seeing XXXX. quarter late third you grows growth in the to fourth in the are quarters levels to you is bit little you

remain historically So pretty and we to high XXXX levels. those expecting year relatively a expect in are strong backlogs

about it quarter look quarter year-end I only was we and ‘XX the same years, okay. you is that for ended thing backlog, for last XXXX, at large last We backlogs which to. interesting when XX relatively the comparing look one a the the which believe backlog quarter think are of $XXX had over like I that is, million, the at of past

we well are which are where bodes high $XXX quarters, XXXX. in So into look when five have at last be you And for million backlog. going for had expecting fourth the plus too quarter obviously, now, the to we pretty we

you XXXX. think I that out we projecting XXXX, in of the starting at are look to you if So recently more same have see seen

Brent Thielman

will you. Okay. Thank on. it pass I

Scott Montross

Thank you.

Robin Gantt

Brent. you, Thank

Operator

from comes question of Henry Investment. next David Wright The

open. line is Your

David Wright

morning. okay. Good Alright,

Scott Montross

Good morning, David.

David Wright

$XX made million So revenue. in you $XX million on

Scott Montross

Yes.

David Wright

That’s a great quarter.

Scott Montross

you. Thank

David Wright

In Congratulations. one margins trying was to three number questions. continue Scott, Couple of the remarks, goals, drive here of for your higher. sort to

of in XX%, would we think past to XXs? and you get XX% quarter, peak low well, did get I the is can back historical up said, it and you’ve you sort like of kind the you this think into to do

Scott Montross

it think we lend Well, hours in to work think of itself and taking is things we specific our do cost to which historically. it the to one that have takes seen down, a reductions lean have continued margins does programs on, through should I or David the that job those manufacturing I improvement

working on is that seeing that you is we margin we based go. as get here continue careful that cost start to about forward. think going But or should to reductions in that Now really I see show team how the up that move on certainly, levels you margin the should high the saying

As we long a forward. have as relatively for here we appears market stable period time have condition, of going prolonged that which a it

David Wright

that Fear on contract, to going Virginia? the Cape And West you in Okay. are produce

Scott Montross

that likely West produce yes. We Virginia, in would

David Wright

a geography kind That’s yes? of new you, for

Scott Montross

the in North jobs had a us. of new Carolina. for have a we bit It’s down Well, east geography in little

owner steel the recognize in product of I and having project. kind like of think a the the that that importance contractors study

the kind future. and bit thing we think ground as into little I new hopefully that So go that for a maybe continues of us of

the regions different than done has all what the So making maybe good think a I a headway were I pipe really we in we regions the pressure advantages of steel the promoting job country. in And some now making team little of think previously. are

David Wright

Thanks great. Okay, much. very

Scott Montross

you. Thank

Robin Gantt

David. you, Thank

Operator

comes The of next from Davidson. Thielman Brent question D.A.

Brent Thielman

there the this follow-up. kind or should business the going about you some of the you we in think kind Hey, talked notwithstanding the taking phenomenal of Hey, forward? is you get see be Is Scott, thanks sort the you of seasonality the while this want XX% quarter-to-quarter. operating margins, and to going plus for here at threshold guys for again think to base are a to, new can where business

Scott Montross

margins condition talked about have a a in think have stable kind stable for period demand you we time Well, these those we Brent. of market mentioned, And as are with the of are think would variations I we good are that levels call we of that doesn’t kind guess margin what Again should we levels Those from demand see. that levels. the stop quarter-to-quarter.

impacted forward one-off of see going be going like that quarter the are numbers for natural quarters going are that that are kind to hit things lot I You from you can which to things the keep we But look fourth Those significantly when higher. produced recovery, to think like of a business. could show margins we at are the and think being insurance example expect by we going forward. could

Brent Thielman

on thoughts flow on real into quick just your And cash end? Okay. year

Robin Gantt

see we it continuing. basically, Well,

year a an so We fairly has working able at but pace. maintain little bit, even the to capital grown over and been volume sales have even

clearly, to able borrowings at we so of have down. paid that the at. beginning We have year And the we stay been did and

And so to fairly able for we been debt-free the have maintain year.

we we balance are position we Anything borrowing, activity but any sheet the to us now, much So, a today. should day seeing could of X with where with we maintain continuing. what see be timing cause of right our being are that in pretty

Brent Thielman

Thank Okay, great. Congrats again. you.

Scott Montross

Thanks, Brent.

Operator

& Morales [Operator of Company. Brent. next comes the Mike line from you, Our question of Thank Instructions] Walthausen

line is Your open.

Mike Morales

guys. Congratulations the on strong morning good Hi, quarter.

Scott Montross

you. Good Thank morning, Mike.

Mike Morales

corporate bit can potential looking of strategic today, and you landscape you the seeing opportunities, give us the growth looking a on relative on color now out the margin see just third is there? of as of multiple point you from the are what what at then the you profile priorities forward Touching the little your are M&A perspective a average to

Scott Montross

recently at profile to that is and or we track as M&A at. that years are that a I of period would on is what other And just we than think the cash better in we question talked Mike, many at the a say things been cash about done flow. done the time. the have thing And we continue to lot have we asked that and situation flow, look When look I a at we you have that with look Ultimately, mentioned, on things the profile, at have Brent jobs the this reducing sales have before working flow some margin similar many, we like when we flow things that have days looking business. outstanding, this payments existing – work are Yes. margin with progress What getting really the cash of that to and on on we margins lot the improve the we amount look fit. for of with look various EBITDA cash to things we

at looking is the flow a a are if has that something likely least through profile go are on see better, at and related that specific have a lot not margin we you cash as more bats guess quicker market OpEx that I turns more good, and you So just better with in bit levels year. that little a something

something the skill be our we sets into because can can doing of company take we mold And it. that successful and and at

the really things that we are those at. So look

Mike Morales

as out far seeing there, as multiples And are Scott? the that you

Scott Montross

at see from this depends look in companies X.Xx significantly at quite you that you still are our relatively size are Xx. anywhere but you frankly reach that No. probably of to on When of at, look current what some are multiples technology multiples Right of We heavy. it now, up out higher. bigger see the the the time, cases some

like like probably X.Xx. stuff XXx, but XXx, are X.Xx see we You looking to that XXx, more can looks

Mike Morales

the work. and up Scott. for color That’s Thank you with keep very helpful, the

Scott Montross

Thanks Mike.

Robin Gantt

Thanks Mike.

Operator

Mike. we Instructions] this questions queue. you, queue. time, in in any Thank no do still have not At At longer this have speakers, any [Operator we time, questions

Scott Montross

thank have Obviously, Well, been to do some with business. and continuing working Okay. to get we the we the we back those have think for, everybody in that those to profitability levels and long work to to the business on improve for call. the on for We we continue are grow starting listening to a time. levels things,

our look we will forward to So call, be next which in...

Robin Gantt

March.

Scott Montross

year. of next March

everyone. thank you So very much

Operator

all concludes today’s you that you, for And Thank conference call. Thank speakers. participating.

may You now disconnect.

Northwest Pipe (NWPX) 3 Nov 192019 Q3 Earnings call transcript