Northwest Pipe Company (NASDAQ:NWPX) Q3 2023 Earnings Call Transcript

Northwest Pipe Company (NASDAQ:NWPX) Q3 2023 Earnings Call Transcript November 3, 2023

Operator: Greetings, and welcome to the Northwest Pipe Company Third Quarter 2023 Earnings Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Scott Montross, President and CEO of Northwest Pipe Company. Thank you. You may begin.

Scott Montross: Good morning, and welcome to Northwest Pipe Company’s third quarter 2023 earnings conference call. My name is Scott Montross, and I am President and CEO of the company. I’m joined today by Aaron Wilkins, our Chief Financial Officer. By now, all of you should have access to our earnings press release, which was issued yesterday November 2, 2023, at approximately 4:00 p.m. Eastern Time. This call is being webcast, and it is available for replay. As we begin, I would like to remind everyone that statements made on this call regarding our expectations for the future are forward-looking statements, and actual results could differ materially. Please refer to our most recent Form 10-K for the year ended December 31, 2022, and in our other SEC filings for a discussion of such risk factors that could cause actual results to differ materially from our expectations.

Photo by the blowup on Unsplash

We undertake no obligation to update any forward-looking statements. Thank you all for joining us today. I’ll begin with a review of our third quarter performance and outlook. Aaron will then walk you through our financials in greater detail. Our third quarter revenue of $118.7 million improved 2% over the second quarter and declined by 3.5% compared to the prior year quarter. Revenue from our SPP segment remained fairly strong, but decreased 3.8% to $80.5 million compared to the prior year quarter. Coming in below our expectations due to onetime anomalies that impacted both revenue and gross margins in the third quarter. First, we had some customer-driven contract changes as well as scope changes of certain projects that had previously been forecasted to benefit the third quarter.

We also encountered some customer-related delays that impacted project delivery timing, which pushed projects scheduled to be produced in the third quarter out into early 2024. This led to short-term production gaps at certain plants causing higher levels of under absorption, further impacting our revenue and margins for the quarter. In addition to these nonrecurring items, higher selling prices in our SPP business due to sales mix were partially offset by decrease in tons produced, resulting primarily from changes in project timing. Prices of hot-rolled band steel declined approximately 27% from the second quarter to the third quarter, but have increased rapidly by approximately 16% from September through year-to-date fourth quarter. SPP backlog, including confirmed orders, was $335 million at September 30, which modestly declined from $343 million at June 30, 2023, and from $347 million as of September 30, 2022.

Our backlog remains elevated by historical standards even though 2023 has been a relatively small bidding year. Now turning to our Precast segment. Precast revenue decreased 2.8% from the prior year quarter to $38.2 million, primarily due to reduced demand resulting from the current interest rate environment impacting the U.S. construction market, which led to decreased absorption of overhead, changes in our product mix and reduced selling prices given lower market demand, all while raw material input costs have remained fairly elevated. Nevertheless, as we progressed into a slower period Precast time of the year in the fourth quarter, our Precast-related order book has remained fairly strong and totaled $52 million as of September 30, 2023, which was down from $58 million as of June 30, 2023, and down from $74 million as of September 30, 2022.

See also 15 Best African Countries To Find A Loyal Wife and 20 Most Stolen Vehicles in the US in 2023.

To continue reading the Q&A session, please click here.