Northwest Pipe Co. (NASDAQ:NWPX) Q1 2019 Earnings Conference Call Transcript
May 09, 2019 • 10:00 am ET
Scott J. Montross
Good morning, and welcome to Northwest Pipe's Conference Call. My name is Scott Montross, and I'm President and CEO of the company. I'm joined by Robin Gantt, our Chief Financial Officer.
As we begin, I would like to remind everyone that statements we make in this call about our expectations for the future are forward-looking statements and actual results could differ materially. Please refer to our most recent SEC filings on Form 10-K for a discussion of risk factors that could cause actual results to differ materially from expectations.
I will now turn to Robin, who will discuss our first quarter results.
Robin A. Gantt
Thank you, Scott. Our first quarter net income was $2.2 million or $0.22 per diluted share compared to an adjusted net loss of $1.7 million or $0.18 per diluted share in the first quarter of 2018. Sales were $62.6 million in the first quarter of 2019 compared to $33.4 million in the first quarter of 2018. Gross profit as a percent of sales was 10.5% in the first quarter of 2019 compared to 4.0% in the first quarter of 2018. The sales increase was due to a 68% increase in tons produced. The Ameron acquisition added about $11.8 million in sales. Gross profit as a percent of sales improved with the increases in production volume.
Selling, general and administrative costs increased to $4.2 million in the first quarter of 2019 from $3.4 million in the first quarter of 2018. This increase was due to higher incentive compensation expense. We had an income tax expense rate of 8.1% in the first quarter of 2019 compared to an income tax benefit rate of 12.2% in the first quarter of 2018. Our 2019 rate was impacted by the estimated changes in the valuation allowance. In the first quarter of 2019, the company provided $10.4 million in cash from continuing operations. Depreciation and amortization were $2.8 million in the first quarter of 2019 and $1.6 million in the first quarter of 2018. Capital expenditures were $1.6 million in the first quarter of 2019, which were for ongoing maintenance capital expenditures. We have planned about $9 million in total capital expenditures for 2019, most of which falls under maintenance capital spending and does not include any amounts we may need for replacement equipment in Saginaw.
As all of you saw in our recent press release, we had an accidental fire in the coatings operation at our Saginaw, Texas facility on April 21. The accounting for the fire, recovery and related insurance reimbursement will likely cause some unpredictability in gross profit until the claim is completely closed. The accounting rules have different timing points on recognizing anticipated insurance reimbursement. Therefore, our gross profit may have additional cost that will ultimately be reversed with insurance reimbursement that will appear as gains in later quarters. We will detail these impacts as practicable to help shareholders understand the impact.
Now I'll turn it over to Scott for an update on our business.
Scott J. Montross
Work on integrating the Ameron assets