nwpx20210331

nwpx20210331_10q.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______to _______

Commission File Number: 0-27140

NORTHWEST PIPE COMPANY

(Exact name of registrant as specified in its charter)

Oregon	93-0557988
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

201 NE Park Plaza Drive, Suite 100

Vancouver, Washington 98684

(Address of principal executive offices and Zip Code)

360‑397‑6250

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.01 per share	NWPX	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S‑T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b‑2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b‑2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock as of April 26, 2021 was 9,857,961 shares.

	Page
PART I - FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited):

Condensed Consolidated Statements of Operations for the three months ended March 31, 2021 and 2020	2

Condensed Consolidated Statements of Comprehensive Income for the three months ended March 31, 2021 and 2020	3

Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	4

Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 31, 2021 and 2020	5

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	6

Notes to Condensed Consolidated Financial Statements	7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	16

Item 3. Quantitative and Qualitative Disclosures About Market Risk	21

Item 4. Controls and Procedures	22

PART II - OTHER INFORMATION

Item 1. Legal Proceedings	22

Item 1A. Risk Factors	22

Item 6. Exhibits	23

Signatures	24

	Three Months Ended March 31,
	2021			2020

Net sales	$	72,311		$	68,923
Cost of sales		63,536			59,344
Gross profit		8,775			9,579
Selling, general, and administrative expense		5,830			7,945
Operating income		2,945			1,634
Other income (expense)		59			(401	)
Interest income		-			22
Interest expense		(227	)		(219	)
Income before income taxes		2,777			1,036
Income tax expense		602			472
Net income	$	2,175		$	564

Net income per share:
Basic	$	0.22		$	0.06
Diluted	$	0.22		$	0.06

Shares used in per share calculations:
Basic		9,814			9,751
Diluted		9,921			9,829

	March 31, 2021			December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	29,893		$	37,927
Trade and other receivables, less allowance for doubtful accounts of $782 and $767		40,214			42,680
Contract assets		75,466			76,985
Inventories		33,177			29,177
Prepaid expenses and other		5,560			5,194
Total current assets		184,310			191,963
Property and equipment, less accumulated depreciation and amortization of $98,702 and $96,684		109,423			110,184
Operating lease right-of-use assets		34,228			30,813
Goodwill		22,985			22,985
Intangible assets, net		10,202			10,518
Other assets		6,167			6,552
Total assets	$	367,315		$	373,015

Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	3,131		$	7,701
Accounts payable		13,260			12,993
Accrued liabilities		14,607			16,814
Contract liabilities		2,034			6,189
Current portion of operating lease liabilities		2,382			2,204
Total current liabilities		35,414			45,901
Long-term debt		5,106			5,888
Operating lease liabilities		31,236			27,911
Deferred income taxes		12,750			12,481
Other long-term liabilities		10,472			11,208
Total liabilities		94,978			103,389

Commitments and contingencies (Note 7)

Stockholders’ equity:
Preferred stock, $.01 par value, 10,000,000 shares authorized, none issued or outstanding		-			-
Common stock, $.01 par value, 15,000,000 shares authorized, 9,857,961 and 9,805,437 shares issued and outstanding		99			98
Additional paid-in-capital		123,487			123,013
Retained earnings		150,556			148,381
Accumulated other comprehensive loss		(1,805	)		(1,866	)
Total stockholders’ equity		272,337			269,626
Total liabilities and stockholders’ equity	$	367,315		$	373,015

										Accumulated
					*Additional*					*Other*			*Total*
	*Common Stock*				*Paid-In-*			*Retained*		*Comprehensive*			*Stockholders'*
	*Shares*		*Amount*		*Capital*			*Earnings*		*Loss*			*Equity*

Balances, December 31, 2020		9,805,437	$	98	$	123,013		$	148,381	$	(1,866	)	$	269,626
Net income		-		-		-			2,175		-			2,175
Other comprehensive income:
Pension liability adjustment, net of tax expense of $0		-		-		-			-		29			29
Unrealized gain on cash flow hedges, net of tax expense of $8		-		-		-			-		32			32
Issuance of common stock under stock compensation plans		52,524		1		(223	)		-		-			(222	)
Share-based compensation expense		-		-		697			-		-			697
Balances, March 31, 2021		9,857,961	$	99	$	123,487		$	150,556	$	(1,805	)	$	272,337

Assets
Cash and cash equivalents	$	691
Trade and other receivables		7,089
Inventories		5,673
Prepaid expenses and other		356
Property and equipment		9,096
Operating lease right-of-use assets		21,684
Intangible assets		11,165
Total assets acquired		55,754

Liabilities
Accounts payable		1,395
Accrued liabilities		1,189
Operating lease liabilities		20,454
Deferred income taxes		5,343
Other long-term liabilities		939
Total liabilities assumed		29,320

Goodwill		22,985

Total purchase consideration	$	49,419

	Estimated Useful Life		Fair Value
	(In years)		(In thousands)

Customer relationships		11.0	$	8,031
Trade names		10.0		2,093
Backlog		0.9		1,041
Total intangible assets		9.9	$	11,165

	Three Months Ended March 31, 2020

Net sales	$	72,512
Net income		2,424

	March 31, 2021		December 31, 2020

Raw materials	$	24,570	$	20,631
Work-in-process		1,076		1,416
Finished goods		5,799		5,489
Supplies		1,732		1,641
Total inventories	$	33,177	$	29,177

	Total			Level 1		Level 2			Level 3
As of March 31, 2021
Financial assets:
Deferred compensation plan	$	4,410		$	3,734	$	676		$	-

Financial liabilities:
Foreign currency forward contracts	$	(910	)	$	-	$	(910	)	$	-

As of December 31, 2020
Financial assets:
Deferred compensation plan	$	4,717		$	3,884	$	833		$	-

Financial liabilities:
Foreign currency forward contracts	$	(1,150	)	$	-	$	(1,150	)	$	-

	Number of RSUs and PSAs (1)			Weighted- Average Grant Date Fair Value

Unvested RSUs and PSAs as of December 31, 2020		129,572		$	25.86
RSUs and PSAs granted		90,368			33.30
RSUs and PSAs vested (2)		(58,809	)		25.53
Unvested RSUs and PSAs as of March 31, 2021		161,131			30.26

	(1)	The number of PSAs disclosed in this table are at the target level of 100%.

	(2)	For the PSAs vested on March 31, 2021, the actual number of common shares that were issued was determined by multiplying the PSAs by a payout percentage based on the performance-based conditions achieved. The payout percentage was 126% for the 2019-2020 performance period and 200% for the 2020 performance period.

	Three Months Ended March 31, 2021						Three Months Ended March 31, 2020
		$		% of Net Sales				$		% of Net Sales

Net sales	$	72,311			100.0	%	$	68,923			100.0	%
Cost of sales		63,536			87.9			59,344			86.1
Gross profit		8,775			12.1			9,579			13.9
Selling, general, and administrative expense		5,830			8.0			7,945			11.5
Operating income		2,945			4.1			1,634			2.4
Other income (expense)		59			0.1			(401	)		(0.6	)
Interest income		-			-			22			-
Interest expense		(227	)		(0.4	)		(219	)		(0.3	)
Income before income taxes		2,777			3.8			1,036			1.5
Income tax expense		602			0.8			472			0.7
Net income	$	2,175			3.0	%	$	564			0.8	%

Exhibit Number		Description

10.1		Form of Performance Share Unit Agreement, incorporated by reference to the Company’s Current Report on Form 8‑K, as filed with the Securities and Exchange Commission on March 19, 2021*

10.2		Form of Restricted Stock Unit Agreement, incorporated by reference to the Company’s Current Report on Form 8‑K, as filed with the Securities and Exchange Commission on March 19, 2021*

31.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Document

101.DEF		Inline XBRL Taxonomy Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

	NORTHWEST PIPE COMPANY

	By:	/s/ Scott Montross

		Scott Montross
		Director, President, and Chief Executive Officer
		(principal executive officer)

	By:	/s/ Aaron Wilkins

		Aaron Wilkins
		Senior Vice President, Chief Financial Officer, and Corporate Secretary
		(principal financial and accounting officer)

SEC Form 10-Q filed by Northwest Pipe Company