NORTHWEST PIPE CO
For the period ended Mar 31, 2025. Filed May 1, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 1, 2025
NWPX$87.31+5.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-10-31.
0001437749-24-032788
Item2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-01.
0001437749-25-014085
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 12 previous paragraphs and 52 current paragraphs.
7 unchanged; 5 reworded; 39 added; 0 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 1 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (39)
Current report
Results of Operations
Current report
The following table sets forth, for the periods indicated, certain financial information regarding costs and expenses expressed in dollars (in thousands) and as a percentage of total net sales.
Current report
Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024
Current report
Net sales. Net sales increased 2.6% to $116.1 million in the first quarter of 2025 compared to $113.2 million in the first quarter of 2024.
Current report
SPP net sales decreased 2.0% to $78.4 million in the first quarter of 2025 compared to $80.0 million in the first quarter of 2024 driven by an 18% decrease in tons produced resulting from changes in project timing, partially offset by a 20% increase in selling price per ton due to changes in product mix. Bidding activity, backlog, and production levels may vary significantly from period to period, thereby affecting sales volumes.
Current report
Precast net sales increased 13.4% to $37.7 million in the first quarter of 2025 compared to $33.2 million in the first quarter of 2024 driven by a 21% increase in volume shipped, partially offset by a 6% decrease in selling prices due to changes in product mix.
Current report
Gross profit. Gross profit decreased 3.8% to $19.4 million (16.7% of net sales) in the first quarter of 2025 compared to $20.1 million (17.8% of net sales) in the first quarter of 2024.
Current report
SPP gross profit decreased 14.5% to $12.2 million (15.5% of SPP net sales) in the first quarter of 2025 compared to $14.2 million (17.8% of SPP net sales) in the first quarter of 2024 primarily due to decreased volume and changes in product mix.
Current report
Precast gross profit increased 22.0% to $7.2 million (19.1% of Precast net sales) in the first quarter of 2025 compared to $5.9 million (17.7% of Precast net sales) in the first quarter of 2024 primarily due to changes in product mix.
Current report
Selling, general, and administrative expense. Selling, general, and administrative expense increased 20.6% to $13.8 million (11.9% of net sales) in the first quarter of 2025 compared to $11.4 million (10.1% of net sales) in the first quarter of 2024 primarily due to $1.6 million in higher incentive compensation expense and $1.0 million in higher base compensation and benefits expense.
Current report
Income taxes. Income tax expense was $1.0 million in the first quarter of 2025 (an effective income tax rate of 19.8%) compared to $2.0 million in the first quarter of 2024 (an effective income tax rate of 27.5%). The estimated effective income tax rate for the first quarter of 2025 was primarily impacted by the tax windfalls recognized upon the vesting of equity awards. The estimated effective income tax rate for the first quarter of 2024 was primarily impacted by non-deductible permanent differences. The estimated effective income tax rate can change significantly depending on the relationship of permanent income tax differences to estimated pre-tax income or loss. Accordingly, the comparison of estimated effective income tax rates between periods is not meaningful in all situations.
Current report
Liquidity and Capital Resources
Current report
Sources and Uses of Cash
Current report
Our principal sources of liquidity generally include operating cash flows and our credit agreement. From time to time our long-term capital needs may be met through the issuance of additional debt or equity. Our principal uses of liquidity generally include capital expenditures, working capital, organic growth initiatives, acquisitions, share repurchases, and debt service. Information regarding our cash flows for the three months ended March 31, 2025 and 2024 are presented in our Condensed Consolidated Statements of Cash Flows contained in Part I – Item 1. “Financial Statements” of this 2025 Q1 Form 10‑Q, and are further discussed below.
Current report
As of March 31, 2025, our working capital (current assets minus current liabilities) was $193.2 million compared to $187.4 million as of December 31, 2024. Cash and cash equivalents totaled $5.3 million and $5.0 million as of March 31, 2025 and December 31, 2024, respectively.
Current report
Fluctuations in SPP working capital accounts result from timing differences between production, shipment, invoicing, and collection, as well as changes in levels of production and costs of materials. We typically have a relatively large investment in working capital, as we generally pay for materials, labor, and other production costs in the initial stages of a project, while payments from our customers are generally received after finished product is delivered. A portion of our revenues are recognized over time as the manufacturing process progresses; therefore, cash receipts typically occur subsequent to when revenue is recognized and the elapsed time between when revenue is recorded and when cash is received can be significant. As such, our payment cycle is a significantly shorter interval than our collection cycle, although the effect of this difference in the cycles may vary by project, and from period to period.
Current report
As of March 31, 2025, we had $25.5 million of outstanding revolving loan borrowings, $13.7 million of outstanding long-term debt, $89.6 million of operating lease liabilities, and $6.7 million of finance lease liabilities. As of December 31, 2024, we had $24.7 million of outstanding revolving loan borrowings, $14.5 million of outstanding long-term debt, $90.7 million of operating lease liabilities, and $6.8 million of finance lease liabilities.
Current report
Net Cash Provided by (Used in) Operating Activities
Current report
Net cash provided by (used in) operating activities was $4.8 million in the first three months of 2025 compared to ($26.1) million in the first three months of 2024. Net income, adjusted for non-cash items, provided $12.0 million of operating cash flow in the first three months of 2025 compared to $12.2 million of operating cash flow in the first three months of 2024. The net change in working capital used $7.2 million of operating cash flow in the first three months of 2025 compared to $38.3 million of operating cash flow in the first three months of 2024.
Current report
Net Cash Used in Investing Activities
Current report
Net cash used in investing activities was $3.7 million in the first three months of 2025 compared to $4.5 million in the first three months of 2024. Capital expenditures were $3.7 million in the first three months of 2025 compared to $4.6 million in the first three months of 2024, which includes $0.3 million in the first three months of 2025 and $0.5 million in the first three months of 2024 of investment in our new reinforced concrete pipe mill, $0.1 million in the first three months of 2025 and $0.5 million in the first three months of 2024 for the construction of a building at our Salt Lake City, Utah facility for the new mill, and the remainder primarily for standard capital replacement. We currently expect capital expenditures in 2025 to be approximately $19 million to $22 million, which includes approximately $2 million of investment in our new reinforced concrete pipe mill and associated ancillary equipment, and the remainder primarily for standard capital replacement.
Current report
Net Cash Provided by (Used in) Financing Activities
Current report
Net cash provided by (used in) financing activities was ($0.9) million in the first three months of 2025 compared to $30.8 million in the first three months of 2024. Net borrowings on the line of credit were $0.9 million in the first three months of 2025 compared to $35.4 million in the first three months of 2024. Net payments on other debt were $0.8 million in the first three months of 2025. No payments on other debt were made in the first three months of 2024. Repurchases of common stock were $3.9 million in the first three months of 2024. No repurchases of common stock were made in the first three months of 2025.
Current report
We anticipate that our existing cash and cash equivalents, cash flows expected to be generated by operations, and additional borrowing capacity under our credit agreement and other loans will be adequate to fund our working capital, debt service, capital expenditure requirements, and share repurchases for the foreseeable future. To the extent necessary, we may also satisfy capital requirements through additional bank borrowings, senior notes, term notes, subordinated debt, and finance and operating leases, if such resources are available on satisfactory terms. We have from time to time evaluated and continue to evaluate opportunities for acquisitions and expansion. Any such transactions, if consummated, may necessitate additional bank borrowings or other sources of funding.
Current report
On December 4, 2023, our shelf registration statement on Form S‑3 (Registration No. 333‑275691) covering the potential future sale of up to $150 million of our equity and/or debt securities or combinations thereof, was declared effective by the SEC. This shelf registration statement, which replaced the registration statement on Form S‑3 that expired on November 3, 2023, provides another potential source of capital, in addition to other alternatives already in place. We cannot be certain that funding will be available on favorable terms or available at all. To the extent that we raise additional funds by issuing equity securities, our shareholders may experience significant dilution. As of the date of this 2025 Q1 Form 10‑Q, we have not yet sold any securities under this registration statement, nor do we have an obligation to do so. Please refer to the factors discussed in Part I – Item 1A. “Risk Factors” in our 2024 Form 10‑K.
Current report
On November 2, 2023, we announced our authorization of a share repurchase program of up to $30 million of our outstanding common stock. The program does not commit to any particular timing or quantity of purchases, and the program may be suspended or discontinued at any time. Under the program, shares may be purchased in open market, including through plans adopted pursuant to Rule 10b5‑1 of the Exchange Act, or in privately negotiated transactions administered by our broker. At this time, we have elected to limit our share repurchase transactions to only those transactions made under Rule 10b5‑1 trading plans, which we believe consider our liquidity, including availability of borrowings and covenant compliance under our credit agreement, and other capital allocation priorities of the business. For a summary of our Rule 10b5‑1 trading plans and shares repurchased during the first quarter of 2025, see Part II — Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds” of this 2025 Q1 Form 10‑Q. Please refer to the factors discussed in Part I – Item 1A. “Risk Factors” in our 2024 Form 10‑K.
Current report
Credit Agreement
Current report
The Credit Agreement dated June 30, 2021 with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent, and the lenders from time to time party thereto, including the initial sole lender, Wells Fargo (the “Lenders”), as amended by the Incremental Amendment dated October 22, 2021, the Second Amendment to Credit Agreement dated April 29, 2022, and the Third Amendment to Credit Agreement dated June 29, 2023 (together, the “Amended Credit Agreement”) provides for a revolving loan, swingline loan, and letters of credit in the aggregate amount of up to $125 million (“Revolver Commitment”), with an option for us to increase that amount by $50 million, subject to provisions of the Amended Credit Agreement. The Amended Credit Agreement will expire, and all obligations outstanding will mature, on June 29, 2028. We may prepay outstanding amounts at our discretion without penalty at any time, subject to applicable notice requirements. As of March 31, 2025 under the Amended Credit Agreement, we had $25.5 million of outstanding revolving loan borrowings, $1.6 million of outstanding letters of credit, and additional borrowing capacity of approximately $98 million.
Current report
Revolving loans under the Amended Credit Agreement bear interest at rates related to, at our option and subject to the provisions of the Amended Credit Agreement, either: (i) Base Rate (as defined in the Amended Credit Agreement) plus the Applicable Margin; (ii) Adjusted Term Secured Overnight Finance Rate (“SOFR”) (as defined in the Amended Credit Agreement) plus the Applicable Margin; or (iii) Adjusted Daily Simple SOFR (as defined in the Amended Credit Agreement) plus the Applicable Margin. The “Applicable Margin” is 1.75% to 2.35%, depending on our Consolidated Senior Leverage Ratio (as defined in the Amended Credit Agreement) and the interest rate option chosen. Interest on outstanding revolving loans is payable monthly. Swingline loans under the Amended Credit Agreement bear interest at the Base Rate plus the Applicable Margin. As of March 31, 2025, the weighted-average interest rate for outstanding borrowings was 6.22%. The Amended Credit Agreement requires the payment of a commitment fee of between 0.30% and 0.40%, based on the amount by which the Revolver Commitment exceeds the average daily balance of outstanding borrowings (as defined in the Amended Credit Agreement). Such fee is payable monthly in arrears. We are also obligated to pay additional fees customary for credit facilities of this size and type.
Current report
The letters of credit outstanding as of March 31, 2025 relate to workers’ compensation insurance and a public improvement project. Based on the nature of these arrangements and our historical experience, we do not expect to make any material payments under these arrangements.
Current report
The Amended Credit Agreement contains customary representations and warranties, as well as customary affirmative and negative covenants, events of default, and indemnification provisions in favor of the Lenders. The negative covenants include restrictions regarding the incurrence of liens and indebtedness, annual capital expenditures, certain investments, acquisitions, and dispositions, and other matters, all subject to certain exceptions. The Amended Credit Agreement requires us to regularly provide financial information to Wells Fargo and to maintain a consolidated senior leverage ratio no greater than 3.00 to 1.00 (subject to certain exceptions) and a minimum consolidated earnings before interest, taxes, depreciation, and amortization (as defined in the Amended Credit Agreement) of at least $35 million for the four consecutive fiscal quarters most recently ended. Pursuant to the Amended Credit Agreement, we have also agreed that we will not sell, assign, or otherwise dispose or encumber, any of our owned real property. The occurrence of an event of default could result in the acceleration of the obligations under the Amended Credit Agreement. We were in compliance with our financial covenants as of March 31, 2025, and expect to continue to be in compliance in the near term.
Current report
Our obligations under the Amended Credit Agreement are secured by a senior security interest in substantially all of our and our subsidiaries’ assets.
Current report
Long-term Debt
Current report
On October 28, 2024, we converted the outstanding balance of the Interim Funding Agreement dated August 2, 2022 with Wells Fargo Equipment Finance, Inc. (“WFEF”), as amended January 23, 2023, March 15, 2023, July 21, 2023, and November 2, 2023 into a $15 million term loan with WFEF that was used to fund our new reinforced concrete pipe mill. The term loan matures on October 28, 2029, bears interest at the SOFR Average plus 2.22%, is payable in monthly installments of $0.3 million plus accrued interest, and is secured by the pipe mill. As of March 31, 2025, the outstanding balance of the term loan was $13.7 million and the weighted-average interest rate for outstanding borrowings was 6.57%. The term loan may be prepaid in full at any time provided that we pay a prepayment fee equal to 2% of the outstanding principal balance if repaid in the first 30 months of the loan.
Current report
Recent Accounting Pronouncements
Current report
For a description of recent accounting pronouncements affecting our Company, including the dates of adoption and estimated effects on financial position, results of operations, and cash flows, see Note 11, “Recent Accounting and Reporting Developments” of the Notes to Condensed Consolidated Financial Statements in Part I – Item 1. “Financial Statements” of this 2025 Q1 Form 10‑Q.
Current report
Critical Accounting Estimates
Current report
The discussion and analysis of our financial condition and results of operations are based upon our Condensed Consolidated Financial Statements included in Part I – Item 1. “Financial Statements” of this 2025 Q1 Form 10‑Q, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of our Condensed Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, and expenses, and disclosure of contingent assets and liabilities. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. On an ongoing basis, we evaluate all of our estimates, including those related to revenue recognition, goodwill, income taxes, and litigation and other contingencies. Actual results may differ from these estimates under different assumptions or conditions.
Current report
There have been no significant changes in our critical accounting estimates during the three months ended March 31, 2025 as compared to the critical accounting estimates disclosed in our 2024 Form 10‑K.
Reworded paragraphs (5)
Previous wording
In addition to being the largest manufacturer of engineered steel water pipeline systems in North America, we manufacture stormwater and wastewater technology products; high-quality precast and reinforced concrete products; pump lift stations; steel casing pipe, bar-wrapped concrete cylinder pipe, and one of the largest offerings of pipeline system joints, fittings, and specialized components. Strategically positioned to meet growing water and wastewater infrastructure needs, we provide solution-based products for a wide range of markets under the ParkUSA, Geneva Pipe and Precast, Permalok®, and Northwest Pipe Company lines. Our diverse team is committed to safety, quality, and innovation while demonstrating our core values of accountability, commitment, and teamwork. We are headquartered in Vancouver, Washington, and have 13 manufacturing facilities across North America.
Current wording
In addition to being the largest manufacturer of engineered water transmission systems in North America, we manufacture stormwater and wastewater technology products; high-quality precast and reinforced concrete products; pump lift stations; steel casing pipe; bar-wrapped concrete cylinder pipe; and one of the largest offerings of pipeline system joints, fittings, and specialized components. Strategically positioned to meet growing water and wastewater infrastructure needs, we provide solution-based products for a wide range of markets under the ParkUSA, Geneva Pipe and Precast, Permalok®, and Northwest Pipe Company lines. Our diverse team is committed to safety, quality, and innovation while demonstrating our core values of accountability, commitment, and teamwork. We are headquartered in Vancouver, Washington, and have 13 manufacturing facilities across North America.
Previous wording
Demand for our Precast products is generally influenced by general economic conditions such as housing starts, population growth, interest rates, and rates of inflation. According to the United States Census Bureau, privately-owned housing starts were at a seasonally adjusted annual rate of 1.4 million in September 2024 and 1.5 million in December 2023, and the population of the United States is expected to increase by approximately 2 million people in 2024. While these two indicators point to a strong housing market, particularly in Texas and Utah which are two of the five fastest growing markets in the United States according to the November 2022 Bluefield ResearchInsight Report – U.S. & Canada Municipal Water Outlook: Utility CAPEX & OPEX Forecasts, 2022-2030 and the states in which our Precast manufacturing facilities are located, the current elevated federal funds rate could continue to temper demand for our precast products.
Current wording
Demand for our Precast products is generally influenced by general economic conditions such as housing starts, population growth, interest rates, and rates of inflation. According to the United States Census Bureau, privately-owned housing starts were at a seasonally adjusted annual rate of 1.3 million in March 2025 and 1.5 million in December 2024, and the population of the United States is expected to increase by approximately 2 million people in 2025. While these two indicators point to a strong housing market, particularly in Texas and Utah which are two of the five fastest growing markets in the United States according to the November 2022 Bluefield ResearchInsight Report – U.S. & Canada Municipal Water Outlook: Utility CAPEX & OPEX Forecasts, 2022-2030 and the states in which our Precast manufacturing facilities are located, the current elevated federal funds rate could continue to temper demand for our precast products.
Previous wording
Our SPP projects are often planned for many years in advance, as we operate that business with a long-term time horizon for which the projects are sometimes part of 50‑year build-out plans. While we experienced a relatively modest level of project bidding in 2023, 2024 has been an improved bidding environment and our backlog for SPP has remained elevated, and long-term demand for water infrastructure projects in the United States appears strong. Additionally, while our SPP business faces possible head winds from recessionary concerns in the broader domestic economy, we currently believe it more likely a modest increase in funding will be brought on by the Bipartisan Infrastructure Deal (“IIJA”) and the Inflation Reduction Act. According to the February 2024 Bluefield ResearchInsight Report – Infrastructure Investment & Jobs Act: Tracking the Spending, Q1 2024, approximately $1 billion earmarked under the IIJA has currently been outlaid by the Federal Government to date, leaving most of the $55 billion spending package available; we expect to benefit from this spending late in the cycle due to the long project timelines.
Current wording
Our SPP projects are often planned for many years in advance, as we operate that business with a long-term time horizon for which the projects are sometimes part of 50‑year build-out plans. As anticipated, we experienced a reduced level of project bidding inthe first quarter 2025, however, we continue to expect full-year 2025 bidding levels to align closely with the level of project bidding we experienced in 2024 as long-term demand for water infrastructure projects in the United States remains relatively strong. Additionally, while our SPP business faces possible head winds from recessionary concerns in the broader domestic economy, we currently believe it more likely a modest increase in funding will be brought on by the Bipartisan Infrastructure Deal (Infrastructure Investment and Jobs Act (“IIJA”)) and the Inflation Reduction Act. According to the October 2024 Bluefield ResearchInsight Report – Infrastructure Investment & Jobs Act: Tracking the Spending, Q4 2024, approximately $2 billion earmarked under the IIJA has currently been awarded to Drinking Water State Revolving Loan Fund recipients via subawards, leaving most of the $55 billion spending package available; we expect to benefit from this spending late in the cycle due to the long project timelines.
Previous wording
Purchased steel typically represents approximately 35% of our SPP projects’ cost of sales, and higher steel costs generally result in higher selling prices and revenue; however, volatile fluctuations in steel markets can affect our business. SPP contracts are generally quoted on a fixed-price basis, and volatile steel markets can result in selling prices that no longer correlate to the cost available at the time of steel purchase. Our average price of purchased steel was $933 per ton in the first nine months of 2024, as compared to annual averages of $994 per ton in 2023 and $1,174 per ton in 2022.
Current wording
Purchased steel typically represents approximately 33% of our SPP projects’ cost of sales, and higher steel costs generally result in higher selling prices and revenue; however, volatile fluctuations in steel markets can affect our business. SPP contracts are generally quoted on a fixed-price basis, and volatile steel markets can result in selling prices that no longer correlate to the cost available at the time of steel purchase. Our average price of purchased steel was $850 per ton in the first three months of 2025, compared to annual averages of $914 per ton in 2024 and $994 per ton in 2023.
Previous wording
Economic uncertainty, including the impacts of raw material shortages, inflationary pressures, potential risks of a recession, and disruptions in the financial markets could have an adverse effect on our business. While the 2024 U.S. presidential election and overall domestic political outlook may result in volatility in financial markets, near-term changes in demand for our products are considered unlikely. The extent of the impact of these broader economic forces on our business will depend on future developments, which cannot be predicted.
Current wording
Economic uncertainty, including the impacts of U.S. global economic policy, raw material shortages, inflationary pressures, potential risks of a recession, and disruptions in the financial markets could have an adverse effect on our business. More specifically, we believe the recently enacted trade policies, and the uncertainty around new tariffs and related countermeasures, could impact our costs, particularly in the short term. These costs will be mitigated to the extent possible. The impact of these broader economic forces on our business will also depend on future developments, which cannot be predicted.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Item** 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations