Northwest Pipe(NWPX) - 2024 Q2 - Quarterly Results

Q2 2024 Financial Results Overview Management Commentary Management highlighted record SPP revenue, strong free cash flow, and anticipated continued segment strength despite weather impacts - Achieved record quarterly revenue of $89.5 million in the Steel Pressure Pipe (SPP) business[2] - Weather-related challenges in Texas disrupted production, shipping, and order intake, particularly affecting the non-residential construction portion of the Precast business[2] - Generated strong free cash flow of $16.2 million in the second quarter, a significant increase from the previous year, driven by record profitability and working capital management[2] - The company expects the SPP business to remain strong for the rest of 2024 and anticipates a stronger third quarter for the Precast segment with improving revenue and gross margins[2] Second Quarter 2024 Financial Results Consolidated net sales and gross profit grew significantly year-over-year, driven by record SPP segment performance, while Precast sales increased slightly with reduced gross profit Consolidated Results Consolidated net sales increased 11.3% to $129.5 million, with gross profit reaching a record $25.8 million and diluted EPS rising to $0.86 Q2 2024 Consolidated Financial Highlights (YoY) | Metric | Q2 2024 ($M) | Q2 2023 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $129.5 | $116.4 | +11.3% | | Gross Profit | $25.8 | $22.5 | +14.8% | | Net Income | $8.6 | $7.4 | +15.7% | | Diluted EPS | $0.86 | $0.74 | +16.2% | Engineered Steel Pressure Pipe (SPP) Segment SPP segment achieved record net sales of $89.5 million (up 15.9%) and gross profit of $17.0 million (up 35.1%), with a $348 million backlog SPP Segment Q2 2024 Performance (YoY) | Metric | Q2 2024 ($M) | Q2 2023 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $89.5 | $77.3 | +15.9% | | Gross Profit | $17.0 | $12.6 | +35.1% | - Sales growth was driven by a 56% increase in tons produced, partially offset by a 26% decrease in selling price per ton due to lower raw materials costs and product mix[3] - Backlog was $282 million as of June 30, 2024. Backlog including confirmed orders was $348 million[3] Precast Infrastructure and Engineered Systems (Precast) Segment Precast segment net sales rose 2.2% to $40.0 million due to higher volume, but gross profit declined 10.9% to $8.8 million due to product mix, with the order book reaching $62 million Precast Segment Q2 2024 Performance (YoY) | Metric | Q2 2024 ($M) | Q2 2023 ($M) | % Change | | :--- | :--- | :--- | :--- | | Net Sales | $40.0 | $39.1 | +2.2% | | Gross Profit | $8.8 | $9.9 | -10.9% | - The sales increase was driven by a 30% rise in volume shipped, which was partially offset by a 22% decrease in selling prices due to product mix changes[4] - The Precast order book was $62 million as of June 30, 2024, compared to $52 million as of March 31, 2024, and $58 million as of June 30, 2023[4] Balance Sheet and Cash Flow Strong Q2 2024 operating cash flow of $22.3 million significantly improved year-over-year, with $6.1 million in capital expenditures and $75.9 million in outstanding revolving loan borrowings - Net cash provided by operating activities was $22.3 million in Q2 2024, compared to $1.2 million in Q2 2023[5] - Capital expenditures totaled $6.1 million in Q2 2024, up from $4.0 million in Q2 2023[5] - The company repurchased approximately 18,000 shares of its common stock for a total of $0.6 million during the second quarter[5] - As of June 30, 2024, the company had $75.9 million of outstanding revolving loan borrowings and an additional borrowing capacity of approximately $47 million[5] Financial Statements Condensed Consolidated Statements of Operations Q2 2024 net sales reached $129.5 million with $8.6 million net income, while year-to-date net sales were $242.7 million with $13.9 million net income, both showing growth Q2 2024 Income Statement Highlights (in thousands) | Metric | Three Months Ended June 30, 2024 (in thousands) | Three Months Ended June 30, 2023 (in thousands) | | :--- | :--- | :--- | | Total net sales | $129,505 | $116,372 | | Total gross profit | $25,814 | $22,481 | | Operating income | $13,619 | $11,465 | | Net income | $8,619 | $7,448 | YTD 2024 Income Statement Highlights (in thousands) | Metric | Six Months Ended June 30, 2024 (in thousands) | Six Months Ended June 30, 2023 (in thousands) | | :--- | :--- | :--- | | Total net sales | $242,720 | $215,469 | | Total gross profit | $45,948 | $39,058 | | Operating income | $22,309 | $16,176 | | Net income | $13,857 | $9,810 | Condensed Consolidated Balance Sheets As of June 30, 2024, total assets were $631.7 million, total liabilities $280.6 million, and stockholders' equity $351.2 million, all showing increases from year-end 2023 Balance Sheet Summary (in thousands) | Metric | June 30, 2024 (in thousands) | December 31, 2023 (in thousands) | | :--- | :--- | :--- | | Total current assets | $307,948 | $272,484 | | Total assets | $631,745 | $597,881 | | Total liabilities | $280,562 | $257,521 | | Total stockholders' equity | $351,183 | $340,360 | Condensed Consolidated Statements of Cash Flows Year-to-date net cash used in operating activities was $3.8 million, a significant shift from prior year's $27.5 million provided, with $10.6 million used in investing and $14.8 million provided by financing Cash Flow Summary for Six Months Ended June 30 (in thousands) | Metric | 2024 (in thousands) | 2023 (in thousands) | | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | $(3,815) | $27,479 | | Net cash used in investing activities | $(10,573) | $(11,136) | | Net cash provided by (used in) financing activities | $14,848 | $(15,872) | | Change in cash and cash equivalents | $460 | $471 | Other Information Non-GAAP Financial Measures The company uses non-GAAP measures like "backlog including confirmed orders" and "free cash flow" to supplement GAAP reporting, providing clear definitions for each - The company uses non-GAAP measures like "backlog including confirmed orders" and "free cash flow" to supplement GAAP reporting[10] - Definitions are provided for key terms: "backlog" (signed contracts for SPP), "confirmed orders" (successful bids without executed agreements), "order book" (unfulfilled Precast orders), and "free cash flow" (operating cash flow less capital expenditures)[6] About Northwest Pipe Company Founded in 1966, Northwest Pipe Company is a leading North American manufacturer of water-related infrastructure products, including engineered steel pipelines and precast concrete, operating 13 facilities - The company, founded in 1966, is a leading manufacturer of water-related infrastructure products[8] - It is the largest manufacturer of engineered steel water pipeline systems in North America and operates 13 manufacturing facilities[8] Forward-Looking Statements This section contains a standard legal disclaimer for forward-looking statements, noting that actual results may differ due to various risks including market demand, raw material costs, and economic conditions - The press release contains forward-looking statements that are not guarantees of future performance and involve risks and uncertainties[9] - Key risk factors include changes in demand, raw material prices, economic uncertainty, interest rate risk, and supply chain challenges[9]