Northwest Pipe(US:NWPX)2020-03-03 18:11Financial Data and Key Metrics Changes - Adjusted net income for Q4 2019 was $12.1 million or $1.23 per diluted share, compared to $2.6 million or $0.27 per diluted share in Q4 2018 [6] - Sales increased to $72.2 million in Q4 2019 from $57.5 million in Q4 2018 [6] - Gross profit as a percentage of sales improved to 23.4% in Q4 2019 from 11.8% in Q4 2018 [7] - Full year net income was $27.9 million or $2.85 per diluted share in 2019, up from $20.3 million or $2.09 per diluted share in 2018 [11] - Adjusted net income for 2019 was $26.7 million or $2.73 per diluted share, compared to an adjusted net loss of $1.7 million or $0.18 per diluted share in 2018 [12] - Sales for 2019 increased to $279.3 million from $172.1 million in 2018 [12] Business Line Data and Key Metrics Changes - The Ameron acquisition contributed approximately $55 million in sales [13] - Selling, general and administrative costs rose to $4.6 million in Q4 2019 from $4.1 million in Q4 2018, primarily due to increased incentive compensation expenses [10] - Full year selling, general and administrative costs increased to $18.5 million in 2019 from $16.7 million in 2018 [14] Market Data and Key Metrics Changes - The backlog for the Northwest Pipe legacy business was a record $258 million at year-end 2019, compared to $252 million at the end of Q4 2018 [21] - The company holds approximately 50% of the steel pressure pipe market, which is valued between $450 million to $600 million [19] Company Strategy and Development Direction - The company aims to maximize its core steel pressure pipe water transmission business while pursuing growth opportunities in adjacent water segments [18] - The acquisition of Geneva Pipe and Precast is expected to diversify product offerings and create growth opportunities [20] - The company plans to focus on integrating Geneva Pipe and Precast, improving performance by prioritizing margin over volume, and driving cost reductions [34] Management's Comments on Operating Environment and Future Outlook - Management noted that the first quarter typically experiences weather-related delays, but expects revenues to be similar to Q1 2019 with improved gross margins [23] - The competitive landscape remains stable, with expectations for continued strength in backlog and positive business conditions through 2020 [33] - Management expressed confidence in the integration of Geneva Pipe and Precast and the growth opportunities it presents [62] Other Important Information - The company received $1.3 million in insurance proceeds related to a fire at the Saginaw facility, which positively impacted gross profit [8] - Capital expenditures for 2020 are projected to be between $14 million to $15 million, primarily for ongoing maintenance [16] Q&A Session Summary Question: Comments on year-end results and margins - Management attributed strong margins in Q4 to improved bidding conditions and cost reductions achieved through lean manufacturing [39][40] Question: Pricing environment and new projects - Management indicated that the current pricing environment remains stable, with expectations for margins to improve in the second quarter [41][42] Question: Expectations for Geneva acquisition and seasonality - Management expects Geneva to contribute several million in revenue, with growth projected at around 4% year-over-year [49][53] Question: Capital allocation post-acquisition - Management discussed ongoing capital allocation processes and plans for innovative product development at Geneva [57]