Northwest Pipe(US:NWPX)2023-05-05 21:23Financial Data and Key Metrics Changes - Revenue for Q1 2023 was $99.1 million, a decline of 9.4% compared to $109.3 million in Q1 2022 [5][43] - Consolidated net income decreased to $2.4 million or $0.23 per diluted share from $3.6 million or $0.36 per diluted share in the prior year [42] - Consolidated gross profit increased by 12.1% to $16.6 million, resulting in a gross margin of 16.7%, up from 13.5% in Q1 2022 [11][44] Business Line Data and Key Metrics Changes - Steel pressure pipe segment revenue decreased by 14.9% to $63.5 million, primarily due to customer-driven delays and severe weather [6][43] - Precast segment revenue increased by 2.7% to $35.6 million, driven by higher selling prices and strong demand [8][44] - Steel pressure pipe gross profit increased by 8.2% to $7.8 million, with a gross margin of 12.2%, up from 9.6% in Q1 2022 [12][45] - Precast gross profit rose by 15.8% to $8.8 million, with a gross margin of 24.7%, up from 21.9% in the prior year [13][46] Market Data and Key Metrics Changes - The company ended Q1 2023 with a strong backlog of $370 million, slightly down from $372 million at year-end but up from $341 million a year ago [6][7] - The precast order book totaled $58 million as of March 31, 2023, down from $64 million at year-end 2022 [9] Company Strategy and Development Direction - The company aims to drive growth in the precast segment, focusing on the integration of ParkUSA and ongoing ERP implementation [14][16] - The strategy includes maximizing efficiency in the steel pressure pipe business, where the company holds a 55% market share [22] - The company is focused on cost reduction measures and enhancing shareholder value through lean manufacturing [23][40] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2023, citing a robust backlog and expected strong performance in the steel pressure pipe segment despite anticipated moderation in bidding volume [36][38] - The precast business is expected to maintain strong demand, particularly in fast-growing markets like Utah and Texas [10][62] - Management acknowledged challenges from ERP implementation but views it as a necessary step for long-term growth [16][52] Other Important Information - Interest expense increased to $1.4 million in Q1 2023, with expectations of approximately $5 million for the full year [49] - The company generated net cash from operating activities of $26.3 million in Q1 2023, a significant increase from $1.6 million in the prior year [50] Q&A Session Summary Question: Will Q2 be as strong as last year for steel pressure pipe? - Management indicated that the backlog is about 12% higher than last year, setting up for a strong revenue trajectory with improved margins [60] Question: How will precast performance affect year-over-year comparisons? - Management noted that while precast is down modestly, strong markets in Utah and Texas are expected to support performance [61][65] Question: Is there enough contracting capacity in California for upcoming projects? - Management confirmed that major contractors have the capacity to handle multiple large projects simultaneously in strong markets like California and Texas [67]