LOS ANGELES A surge in water transmission business, due in part to a large Texas project, offset an unprofitable fourth quarter in tubular products for Northwest Pipe Co.
The Vancouver, Wash.-based pipe producer posted net income of $4.5 million for the three months ended Dec. 31, triple earnings of nearly $1.5 million in the same period a year earlier, on sales that jumped 16.3 percent to $136.19 million. Full-year net income of more than $16.2 million was up 28.3 percent from $12.7 million in 2011 on a 2.5-percent increase in sales to $524.5 million.
The companys fourth-quarter net income all came from its water transmission group, which had operating earnings of $15.2 million, more than double nearly $6 million a year earlier, on sales that increased 42.7 percent to $88.2 million from $61.8 million.
In contrast, the tubular products segment suffered a quarterly operating loss of $3.7 million vs. earnings of $2.2 million a year earlier on sales that fell 13.3 percent to almost $48 million from $55.3 million.
"As expected, we saw lower margins in the tubular products segment in 2012 compared to 2011 with the competition from increased quantities of imported energy pipe, particularly in the third and fourth quarters," according to president and chief executive officer Scott Montross, who also cited declining drilling activity due to lower natural gas prices.
But Montross said the water transmission group had its "highest quarter ever" in both sales and gross profit, due in part to production for the Lake Texoma project in Texas. Northwest Pipe last year won a contract to provide 34,000 tons of 84-inch and 96-inch welded steel pipe for the North Texas Municipal Water District, which includes a 70-mile pipeline running from Lake Texoma to a water treatment facility at Lake Lavon. The job, which is scheduled to run through mid-2013, is expected to generate revenue of $69 million (amm.com, July 25).
Montross expects the water transmission group to show first-quarter profitability similar to the fourth quarter, although on lower sales, while tubular products will be "near breakeven" due to continuing import competition.