NWPX - Earnings call transcript Q4 2019

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Operator

Welcome and thank you for standing by. At this time, all participants are in a listen-only mode until the question-and-answer session of today’s conference. [Operator Instructions] This call is being recorded.

If you have any objections, you may disconnect at this point.

I will now turn the meeting over to your host Scott Montross.

begin. now may You

Scott Montross

Robin Good & name welcome I is of Vice joined and Patrick. and Financial conference Wilkins, Controller. Aaron am Northwest call. CEO our by I'm company. My Scott of the our morning, you, Chief to Officer; Finance and President Pipe's President Gantt, Corporate Thank Montross, and

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

discuss results. full our fourth I now will quarter will year turn to who and Robin

Robin Gantt

Scott. Thank you,

net per in quarter in Our net adjusted compared million per Sales XXXX, $XX.X quarter fourth of million in was income to compared $XX.X were share adjusted to diluted $XX.X fourth fourth $X.XX diluted of or an fourth of or quarter quarter XXXX. the share $X.X million income of XXXX. the the $X.XX million

product per XX.X% profit that XXXX. the in percent as was to sales in fourth tons a fourth partially offset a mix. produced in Gross tons in quarter was compared prices XXXX, occurred quarter decrease of the of due increase selling The of increase sales XX.X% to a in significant change a by with

gross production and profit percentage sales in volume. profit Gross increases a with of improved as the

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

about Saginaw million for from costs in remaining net We fire. reimbursements have $X.X the

company the with working insurance remaining on the are receiving We recovery.

operational was mentioned October. quarter call, in our third As Saginaw in fully we

This primarily $X.X incentive to expense, $X.X increased to administrative was increase fourth of and million Selling, XXXX. general quarter with in XXXX from the increase in due profitability. in of million fourth costs increase the the compensation quarter

full or to expenses, on diluted $XX.X per purchase per on one-time was Moving XXXX. share $X.XX million several including compared $XX.X and diluted and results illegal of settlement. in did Houston acquisition in year net bargain restructuring in the income gains $X.XX the share, million adjustments related that have XXXX results, our to costs, XXXX the sale gain, impacted Monterey, or We

we XXXX, diluted income of When or one-time $X.X was XXXX loss net $X.XX $XXX.X diluted in in of sales for to an compared percent adjusted million as was adjust tax, $X.XX net the $XXX.X results net in XX.X% our items million share X% XXXX. XXXX in XXXX. profit in to $XX.X million adjusted or Sales million per of per increased these share XXXX. a in to from Gross compared

was due in by The demand mix. Remaining in per in a in increases percent ton, improved with a as of to Ameron increase $XX the profit an in product was decrease selling to which due added increase the about acquisition produced partially increase million with tons volume. prices offset Gross sales sales.

of offset the was in $XX.X in by costs XXXX due $XX.X and in to million costs This to XXXX. higher return Selling, profitability, with XXXX from administrative in decrease million general increased a compensation the related decrease incentive to partially had Precast of in $X.X We in acquisition the latest in acquisition early Geneva $XXX,XXX costs with to million about acquisition related the and XXXX. and Pipe in XXXX, costs. about acquisition Ameron, XXXX

XX.X% income tax XXXX, in benefit rate tax have in XXXX. income an compared We rate an of XX.X% of to

for continuing by In the million XXXX, allowance. changes company in valuation impacted provided was $XX.X the rate the cash XXXX Our in operations.

$X.X and and million and million Depreciation XXXX in maintenance equipment amortizations replacement XXXX, Capital capital were Saginaw. in million expenditures ongoing and were in building for $X.X XXXX. $XX.X which were in

million We total for capital to in have about maintenance $XX capital is million $XX spending. expenditures for XXXX ongoing which

to you have I met turn and would to Scott, everyone it investor say I to thank like farewell Before in community. over I the

kindness As in very call in I And adventures, It planned your end final honor on that turns October, the with very I and has the as you company at years. am will of before many confident the the you at business. I for we conversations hands. leave announced my will to the this new good is the an work to Thank much miss twists of moving I in month. Pipe. been leaving I over and Northwest over conference water the be am

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

Scott Montross

during growth strategy. call two announced February As we on Pipe our we have our X, discussed of last Geneva we and acquisition the parts when Precast, to

lean our of and manufacturing, pressure maximize opportunities which transmission growth Water July immediately known accretive limited steel cost Ameron to XXXX, us in our Group, on core focus to by ultimately the pursuing First, to results. by acquisition pipe the financial continuing water was business leading Transmission in of but reductions to company's

strategy flow acquisition an characteristics of and now which there's in pressure a having million to opportunities, part segment, pipe which market, water We to XX% $XXX opportunities, adjacent superior to the is is profile. with grow cash limited market $XXX million which strong our fairly steel expansion growth second is a better approximately generally growth have a and why margin

avenues to provide by and adding that innovative led the of are Pipe Pipe creating for opportunities product acquisition acquisitions. products organic expected recent to our our chose Geneva and market, expanding Precast concrete for expansion of and growth market, and Precast significantly available diversifies and growth opportunities, We acquisition Geneva Precast. our The which offering opens

of close to landscape Pipe quarter the XXXX. $XXX had fourth that quarter year million at that third demand of of pressure our million As XXXX margin to XXXX, competitive of and highest December business. highs our the experienced for for was end strong transmission stable of fourth a since was million The revenue the a levels, quarter, the to and and Northwest year historical end that XX, backlog gross full and end record backlog compared a pipe elevated $XXX steel legacy gross that XXXX, at led the $XXX the throughout we water profit business had

quarter first legacy for the quarter business. business, customer year at Northwest when or delays events pipe time Looking the the the of the generally affect our first weather is

pushed into We jobs second have quarter. some have seen out that the

first to percentage issues points delays backlog As gross a we customer Weather are job elevated and to backlog, our historical remain to margins the profit. bit first that result, of XXXX higher. affected standards. five and the expected a expect by with to have four but lower, quarter are similar revenue be quarter Revenues drift gross

business and first that be in expected of quarter, newly acquired which gross legacy in the February the we've March, are expect we million the months the and include to Geneva business. similar will margins that For several Precast revenue to and highs in recent the Pipe to generate seen

water d'Arc a has fund $X following projects. the has current SWIFT market, and SWIFT Houston the Texas the Bois Lake to programs the projects six to upcoming look The In like years. and future. transmission is last over expected over billion continue into at program the major well in project funded

Houston of has to been pipe. program on multiyear, stages a of segments, is Northwest XX,XXX are project successful major of series segments complete. water the surface the The bidder XX,XXX Houston from a with representing multiple Pipe tons multi-agency individual in representing segments pre-manufacturing tons The over various production pipe. ship of

representing throughout surface are XXXX program the of We an additional additional Houston segment an will water that forecasting bid or XX,XXX tons. segments

and construction was production d’Arc line finished in d’Arc The Lake of has Bois the project were we represents of which approximately Bois on a for Lake Northwest are tons on North all pipe Texas water the by begun stages pipe. represents project. bidder a XX,XXX segments Water portion various in Municipal approximately and XX,XXX successful raw delivery. water currently District the of line that tons of awarded of the Pipe

project the to The project continue California between state. tons We the Western balance $X.X IPL expected this prop and XXXX XX,XXX one funds on bidding the XXXX. various years for year XX% the In those of major for has projects IPL billion California of needed within market, to Agency appropriated created much infrastructure later projects. Resources water for XXXX. been the through the the According were Natural and begin have X suppliers of of is bond representing funding

activity We expect have the programs requirements out over next continue stretch new generated market bidding these in projects for California Water years. expect to the year XX,XXX tons. for see next to reuse in which we opportunities representing several

miles of to about from projected that It the annually rehabilitation tons pipeline. The to to project has is X. The a will two XX,XXX in PCCP funding reservoir The XXXX over three result next XXXX. involve will XX programs begin prop years. water storage project in site's received is XXX-inch over

Water North it In slowed Valley diversion XXX on the for project Supply to River flood has Dakota appears be project, an project, Red XX,XXX taking urgent with as is funding priority. which mile competing ton

two We are this year. with demonstration bidding a this mile will project start that segment hopeful on

on New Northwest pipe, Pipe has was Navajo-Gallup is tons which this a Mexico. last to the supply of project XXXX started major phase, large multi-phased underway production over in represents selected segment. diameter

bidding gross market year, Throughout to close for to look volumes volumes, profit transmission strong which ended saw continue a be of backlog highs number entire programs. business. XXXX we to continuation highs in for year stable a large a with and bidding in The the of revenue strong water a bidding remained historical multi-year that close to historical XXXX with

positive our We business in for expect continued near-term continued strength XXXX. the and through conditions backlog

the business Pipe cost efficiencies over Precast; three, the be and focused company. As focusing the we all volume; on margin on two, improving successful will one; the Geneva of performance move and we reductions integration is forward, driving of of by levels and

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

Operator

Thielman. have first the open. is We line Brent, Instructions] from coming of your Brent [Operator our line now question

may You question. your ask

Brent Thielman

lot companies the on congrats to the been latest you you, and joined, proud here with of working best all Robin results. with be you great a it's long come year-end since a and way the to Yes,

Robin Gantt

Thank you.

Brent Thielman

maybe don't the think tend this my in I've quarter, seasonally fourth and is it any I company which margins around so sounds here. recall always guess seasonally slower. some first And still the see your generate surprised But kind time forecast, more of Scott, to to that? in it of XQ type appreciate I little slower come granularity question weather like I a and it the margins still as I seen of

Scott Montross

up think, quarter, way lined that you're appropriate the actually when at going just And pipe what's sometime you fourth on early either as when year, that's the in the in Brent, you're pricing a accumulation that the first between really I prices. Yes, direction, seeing stuff bidding previous or of in where and XXXX, bid in continuing is the well market, I the pipe look at the backlog as the the half steel spread the with think to was of year. better move looking

some it process. with work And, done of cost taking you of I attributed entire our to and manufacturing the has production think to at be know, the plants out that all costs of we've lean

that had the think reductions was And that lot fourth think the cost to the I I through we over do years. and So we've - a it's big last a few backlog quarter. with working been

Brent Thielman

I And have guess, how mix, or going environment away on little today the work of pricing we to bit - ago, tons you do gross margin? but Yes. bid, on impact, stood a still an kind continue facilities, talk depends plus where but I environment trying know to through I projects to and, which new are can a step new conducive looks about from an know of to year to relative the we XX% flow again, is in it

Scott Montross

can between and competitive pricing would I in good that you're which the Obviously, is right pretty also steel remains margins. that spread the pretty say but landscape now, a is pretty think say also stable. relatively to pricing stable, I the always still environment. conducive quickly, Yes, change would I pipe

we we the quarter expect So jobs delays back some in the seen that second quite start through with larger to certainly, some of get start we the those expect we've back up overhead margins the as declining the to frankly in getting of first year. absorption, and quarter,

Brent Thielman

will the Yes. by And it but offer a essentially, be it'll as then offset outlook around first costs? just revenue, clarification some the transaction quarter thought on process Geneva,

Scott Montross

was of at day because January. just of Well, we right it out months acquired two very very, getting were last the Geneva,

So revenue. in there million is several

water gross transmission what the toward looking to the side, are are Geneva, the we working on We margins costs what look through when But see all high at business. gross transaction see we and you those see margins look going are for generally the to like. what they

So there were a little bit higher.

or because positive margin Geneva long the number transaction bit which of we some it frankly is quarter where a But took a and some stabilizes, transaction see an amount because get at costs, but is bit of first $XX the the a it up, pull of million extent an pulling enough quite we as with transaction of the and quite elevated the messy to see costs that, got with $XX to are the quarter first on associated going overall little least once time. and million, the time we've legal should acquisition and SG&A process why you'll into little some still to because related margins period costs, took gross it business the So high be basis. the do the expect up, that be in annualized so it's

costs So have impact you're ultimately, a I margins the it's going that, the on even we overall but on little than more to there being us positive going when high transmission margins. expected looking bit to at is of water think side forward, the a

Operator

The coming line from Instructions] is question [Operator of Richard. Gus next the

open. line Your now is

question. ask your may You

Gus Richard

taking my question a on great year. Yes, thanks congratulations for and

how the talk you can course little seasonality next he that for Geneva, of about the years? then bit expectations over think business few your a can hold do As you grow you and in much

Scott Montross

main bit business second and hitting in think of in quarters, generally look fourth the then the third in little cool and and when a I that, and to season the off the quarter, Yes, associated the you construction seasonal the in start Precast with start high pick at points business the RCP the you things slowly quarter. first that's part up

this of our it But little the kind at at way develops. year. the right bit time normally book is it that's of a order than seasonally larger now Geneva So seems

a we about probably applications. when acquisition, better sewer innovative actually that on of We corrosive the working looking Gus think you're about X%. we're growth we're the looking where it a growth think on on be that, I for rate, at on bit based think call that could at we products the talked about growth little talked year-over-year these that rate we

that now. buy where as a see rate long we So to products X% the relative and to new it a on is added stays these basis, year-over-year as innovative right as being market

Gus Richard

And that growth about the then just of thinking business.

Tracy, and into the to capability that fold how Geneva? in with does California. You going have that a Are strategy you augment

Scott Montross

growth in Yes, whole company I when only expand that's we're acquisitions, one look the have talked think bit wet we've diameter, a we cast, than the and at - you little said, different going Tracy do already but plant a thing we about Geneva of feet being and RCP do only is to is concept Precast wet that be we're product large we've of first ability looking They're XX/XX we for it's the looked cast a goes a diameter to California up can because this that lot Geneva in we expansions a that wet pattern inches at RCP they do places about and to. the because up what very XX cast, which but product, to diameter, not at where doing to like cast products. one dry what at

have can Tracy the directions innovative play. plant of opportunities do bit of might more We'd lot idea at of other able have product make at a already that the So be think what that products with little bit is be products we forms, little RCP certainly where we're the and creating - to that to to the Precast of things a been seeing plant to we've that something looking these there. but make we looking there's because there. Tracy one some do different vaults, a like We

Gus Richard

several Geneva year-on-year of then, on million that guidance, the and correct? is want I in of understand flat you to acquisition then legacy I that make the clearly, top the be And business sure expect from terms to just

Scott Montross

Correct.

Operator

Our from coming the Morales. of Mike next is line question

Your line is now open.

your ask may You question.

Mike Morales

and echo and on that taking folks to for of endeavors. and said, thank Brent question your great everything work luck morning, future my Robin best you Good

Robin Gantt

I it, you, appreciate Thank Mike.

Mike Morales

we're plant. transaction. housekeeping you the Ameron on about a you discussion from on question just give post the had expansion of that In just the through Can some the an thinking update Got of that me just you're minds now Tracy capital allocation us how acquisition?

Scott Montross

the go October timeframe. through we Well, year in process capital allocation every the

year, through we of timeframe, purchase the because already little So bit we working got But a were for the in legacy did there. allocation this - capital January disjointed it's Geneva the of business. we've as capital allocation kind

going probably probably the another, of we're So over million somewhere Geneva the course area X.X in be to XXXX. of

innovative dirty at building that toward a going for plants. line we into lot Northwest I capital. bit which the a facilities geared It's normal with business, Geneva the growth out Mainly the think the is pretty us depreciation had in legacy deeper side and of little create water relatively products then organic Pipe of we've much these get that think to at

Operator

have this moment over at Instructions] phone. question have the we we at the no As this over phone. moment no speakers, [Operator speakers, As questions

proceed. may You

Scott Montross

we if well, the no call. attendance other everybody's questions, are Okay, appreciate on there

we’re the business. the with close about relatively XXXX steel pipe of and acquisition Geneva coming it's this company Precast year opportunities. very I We're excited to very, Pipe a with and into going our what the and think to to year - out growth pressure record bring

a very, very backlog. have strong We

two now the through a talk $XXX we for XXXX. you quarters, had the we over and six that Well, the the million $XXX going had were when forward, XXXX, part about XXXX, $XXX we've plus only before thing right way backlog big the that million million, to last all back And see quarters last it three we when date or backlog is backlog. in there about of

So that bodes well.

it I think that market, precast billion related that. growth $X.X presents other to $X a being very We thing has add Geneva position is strong the market. a big billion market a size innovative that of even in those for $XX more the opportunities to is and water lot the for think billion products

it questions and we think exciting going we have opportunities of acquisition forward. were some and around, is the expansion very So - I think

think right But setting we we Pipe. Obviously solid the markets sure this are very forward that and really Precast that and our present integrate concern a on is exciting the path Northwest making I opportunities Geneva us now, growth Pipe biggest successfully going to from move business. as

So we be appreciate think to you to again everybody it is timeframe, May attending and excited we'll right. the call, I here talk in

much. you very thank So

Robin Gantt

you. Thank

Scott Montross

Bye, bye.

Operator

And you conference. concludes for that participating. today’s Thank

now may You disconnect.

Scott Montross	President and CEO
Robin Gantt	Chief Financial Officer
Aaron Wilkins	VP of Finance & Corporate Controller
Brent Thielman	D.A. Davidson & Co.
Gus Richard	Northland Securities, Inc.
Mike Morales	Walthausen & Company

Northwest Pipe (NWPX) 3 Mar 202019 Q4 Earnings call transcript