• Annual Net Sales: $492.5 million, up 10.8% year over year.
• SVP Segment Revenue: $337.9 million, up 14% year over year.
• Precast Segment Revenue: $154.6 million, up 4.5% year over year.
• Consolidated Gross Profit: $95.4 million, up 22.9% year over year.
• Gross Margin: 19.4%, up from 17.5% in 2023.
• Net Income (Q4 2024): $10.1 million or $1 per diluted share.
• Full Year Net Income: $34.2 million or $3.40 per diluted share.
• SPP Backlog: $310 million as of December 30, 2024.
• Precast Order Book: $61 million as of December 30, 2024.
• SG&A Expenses (Full Year): $47.2 million, up 7.7% year over year.
• Free Cash Flow (Full Year): $34 million.
• Debt Repayment (2024): $26 million.
• Capital Expenditures (Q4 2024): $4.2 million.
• Outstanding Borrowings: $24.7 million as of December 30, 2024.

• Warning! GuruFocus has detected 3 Warning Sign with NWPX.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Northwest Pipe Co (NASDAQ:NWPX) achieved record financial and operational performance in 2024, with net sales reaching $492.5 million, one of the highest in the company's history.
• The company reported a record consolidated gross profit of $95.4 million, up 22.9% year over year, resulting in a strong gross margin of 19.4%.
• The SVP segment revenue totaled a record $337.9 million in 2024, reflecting a 14% year-over-year increase due to higher production levels and a strong backlog.
• Northwest Pipe Co (NASDAQ:NWPX) achieved record safety performance in 2024, with a total recordable incident rate of 1.25, underscoring its commitment to employee well-being.
• The company successfully repaid $26 million of debt in 2024, maintaining a healthy balance sheet with ample liquidity.

Negative Points

• The non-residential side of the precast business faced depressed market conditions, impacting volumes and offsetting some of the company's overall performance.
• Lower realized selling prices due to decreased raw material costs partially offset the company's 2024 performance.
• Steel prices declined throughout 2024, although they have been rising in 2025, which could impact future project pricing.
• The company faced challenges with tariffs enacted on foreign steel, which negatively impacted gross profit by $0.8 million during the quarter.
• Higher interest rates continued to affect the market for commercial construction, leading to reduced shipments and margin compression in the non-residential precast business.

Q & A Highlights

Q: Can you discuss your expectations for free cash flow in 2025 and how you plan to manage cash flow variability between quarters? A: Scott Montross, CEO: We focus heavily on cash flow, particularly in managing cash tied up in current assets related to the SPP business. This focus is part of management's variable compensation, and we monitor cash flow daily. We expect our cash flow to be as good or better than in 2024. Aaron Wilkins, CFO: We had strong billings in the last quarter of 2024, setting us up for better cash flow performance in the first quarter of 2025 compared to last year. We anticipate free cash flow to range between $23 million and $30 million for the full year.

Q: How does the current industry capacity for SPP affect your profit outlook for 2025 and beyond? A: Scott Montross, CEO: We have a rated capacity of about 180,000 tons annually, with practical capacity around 135,000 to 140,000 tons. We hold approximately half of the market capacity. Even with expected IIJA projects, we have more than enough capacity. We can scale up quickly by running multiple shifts if needed, so we don't foresee any issues handling higher production levels.

Q: Can you provide more details on the tariff issue mentioned and its potential impact? A: Scott Montross, CEO: The tariff issue stems from a proclamation by the previous administration imposing a 25% tariff on steel not poured and melted in the US, Canada, or Mexico. This retroactive tariff affected us in the fourth quarter of 2024 and will impact the first quarter of 2025. We are contesting this with trade attorneys, but it's a long process. The new administration's policies may change the situation, but we are prepared to manage the impact.

Q: How do you see the non-residential precast market developing in 2025? A: Scott Montross, CEO: We monitor the Dodge Momentum Index, which indicates strong non-residential project planning. This has translated into a strong order book for our non-residential facilities, particularly Park USA. We expect production and shipment levels to improve in 2025, recovering from a 15-20% decline in 2024 due to interest rates.

Q: What are your M&A strategy and prospects for growth through acquisitions? A: Scott Montross, CEO: We are actively pursuing M&A opportunities to grow our precast business. We have a couple of prospects that could materialize this year or early next year. Our strategy is to grow into a billion-dollar company, focusing on acquisitions that can add significant top-line revenue. We aim to create mass to pursue larger opportunities in the future.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.