Northwest Pipe’s Q1 Earnings: Can Strong Momentum Overcome Near-Term Concerns?

Northwest Pipe Company (NWPX) is poised to deliver its first quarter 2025 earnings report on May 1, 2025, following the release of financial results on April 30. The quarter will test whether the company’s recent resurgence in sales and profitability can overcome lingering market skepticism, particularly after a sharp stock price decline in late February. Here’s what investors should watch for—and why the stakes are higher than they might appear.

A Year of Contradictions: Growth Amid Uncertainty

Northwest Pipe’s 2024 was a tale of two halves. After a challenging 2023 marked by declining sales (-2.9% year-over-year) and slumping gross profit (-9.6% YoY), the company rebounded decisively. Full-year 2024 net sales hit $492.5 million, a 10.8% increase from 2023, driven by record performance in its SPP (Steel and Plastic Pipe) segment. The segment’s revenue surged 14% to $337.9 million, fueled by a robust backlog of $310 million as of year-end—a clear sign of sustained demand for infrastructure projects.

Yet the precast segment, which accounts for roughly a third of revenue, grew only 4.5% to $154.6 million, reflecting ongoing softness in non-residential construction. This uneven performance underscores a key risk: Can Northwest Pipe’s steel and plastic pipe division continue to carry the company while the precast business recovers?

Q1 Outlook: Momentum vs. Market Anxiety

Analysts project a modest sequential rise in Q1 2025 earnings per share to $0.53, up slightly from $0.52 in Q1 2024. But the numbers tell only part of the story. Management has emphasized two critical factors:

1. Backlog Strength: The SPP backlog remains at record levels, suggesting solid execution in 2025. Historically, backlog is a leading indicator of future sales, and with water infrastructure projects gaining federal and state funding, demand could stay robust.
2. M&A and Debt Reduction: Northwest Pipe paid down $26 million in debt in 2024 and has signaled interest in acquisitions to bolster its precast business. Executing on these strategies could alleviate concerns about the segment’s sluggish growth.

Why the Market Reacted Sharply—and What It Means

The February 26 earnings call for Q4 2024 saw shares plummet 10.7% in a single day, despite record financial results. This reaction suggests investors are pricing in near-term risks, such as:
- Softness in precast margins: The segment’s 4.5% revenue growth in 2024 lagged the SPP division, and any further margin pressure could weigh on profitability.
- Valuation concerns: At a trailing P/E of 22x, Northwest Pipe trades at a premium to its five-year average of 18x, making it vulnerable to earnings misses.
- Macroeconomic uncertainty: Rising interest rates and potential delays in infrastructure spending could slow project timelines, impacting backlog conversion.

Historical Context: A Pattern of Resilience?

Northwest Pipe’s Q1 performance has historically been a bellwether. In Q1 2024, it achieved record sales ($113.2 million, +14.2% YoY) and gross profit ($20.1 million, +21.5% YoY), outperforming its full-year growth trajectory. If Q1 2025 matches or exceeds these figures, it could reinforce the company’s ability to sustain momentum.

Conclusion: A Crucial Quarter for Sustaining Momentum

Northwest Pipe’s Q1 results will be a litmus test for its ability to balance near-term challenges with long-term opportunities. Key data points to watch include:
- SPP revenue growth: A continuation of the segment’s 14% YoY expansion would validate its dominance in water infrastructure.
- Precast margin recovery: Even a modest rebound from its 2024 margins could reduce concerns about its diversification strategy.
- Backlog conversion: A reduction in the $310 million backlog (which stood at $289 million in Q3 2024) would signal execution efficiency.

With free cash flow hitting $34 million in 2024—up from $20 million in 2023—and a clear focus on debt reduction and M&A, Northwest Pipe has the financial flexibility to navigate headwinds. However, investors will demand proof that the company can deliver on both its backlog and its vision for precast expansion.

In the end, Northwest Pipe’s story hinges on two truths: Infrastructure spending isn’t going away, and the company’s backlog suggests it’s positioned to capitalize. But for investors, the question remains whether this quarter’s results will confirm that Northwest Pipe is more than a cyclical play—it’s a structural winner in an industry that’s finally getting the attention it deserves.