Northwest Pipe Company’s Q1 2025 Earnings: Navigating Challenges with Strategic Resilience

Northwest Pipe Company (NASDAQ: NWPC) reported its first-quarter 2025 earnings on April 30, 2025, revealing mixed financial performance amid external headwinds but signaling optimism for the remainder of the year. The company’s results highlighted resilience in its core segments and strategic initiatives aimed at capitalizing on long-term infrastructure trends.

Financial Highlights: Growth Amid Headwinds

Net sales rose 2.6% year-over-year to $116.1 million, driven by strong performance in the Precast Infrastructure and Engineered Systems segment. However, net income declined 23% to $4.0 million ($0.39 per diluted share), reflecting margin pressures in the Steel Pressure Pipe (SPP) segment. Gross profit fell 3.8% to $19.4 million, with SPP margins contracting 230 basis points to 15.5%, while Precast margins expanded 135 basis points to 19.1%.

The reflects investor skepticism, trading at $42.88 as of April 30—below its 52-week high of $57.76 but above its low of $31.50.

Segment Analysis: Strength in Precast, Challenges in SPP

• SPP Segment: Revenue declined 2% to $78.4 million due to lower production volumes (18% fewer tons produced) caused by weather disruptions and trade policy uncertainties. Selling prices per ton rose 20%, but margin pressures persisted. The SPP backlog stood at $203 million, with confirmed orders surpassing $300 million by late Q1, signaling improved bidding activity. Management expects margins to rebound in Q2.
• Precast Segment: Revenue surged 13.4% to $37.7 million, fueled by a 21% increase in shipped volumes. Residential demand (e.g., housing in Utah) drove growth, while non-residential construction lagged due to macroeconomic uncertainty. The Precast order book grew 23% year-over-year to $64 million, supported by federal infrastructure funding.

Strategic Moves and Risks

1. Rebranding: Northwest Pipe plans to rebrand as NWPX Infrastructure, Inc. in June 2025 to emphasize its expanded role in infrastructure solutions. This aligns with its $625 billion addressable market for water infrastructure upgrades.
2. M&A Focus: The company prioritized acquisitions in the precast sector to boost market share (currently 1% of the $14 billion precast market). Recent moves, such as expanding ParkUSA products to legacy SPP plants, aim to diversify revenue streams.
3. Share Repurchases: In April 2025, the company repurchased $5.0 million of stock, with $24.9 million remaining under its repurchase program.

Risks: Trade policy changes, supply chain disruptions, and interest rate impacts on non-residential construction remain key concerns.

Balance Sheet and Liquidity

The company maintained a strong financial position, with $98 million in available credit under its revolving loan facility. Net cash from operations improved to $4.8 million (vs. -$26.1 million in Q1 2024), reflecting better working capital management.

Outlook and Investment Thesis

Management highlighted Q2 2025 as a turning point, with SPP margins expected to recover and Precast shipments to accelerate. The long-term outlook is bolstered by federal infrastructure funding (e.g., $3.3 billion allocated to water projects under the IIJA) and the aging U.S. water system, which requires an estimated $625 billion in upgrades over 20 years.

Conclusion: A Buy for Long-Term Infrastructure Plays

Northwest Pipe’s Q1 results underscore its ability to navigate near-term challenges while positioning itself for sustained growth. With a backlog-driven SPP segment, expanding precast operations, and strategic initiatives like rebranding and M&A, the company is well-placed to capitalize on infrastructure tailwinds.

Investors should weigh the risks—such as trade policy volatility and interest rate impacts—against the company’s solid balance sheet and secular growth drivers. At $42.88, the stock trades at a P/E of ~11x, below its five-year average, suggesting undervaluation. For those seeking exposure to U.S. infrastructure spending, NWPX Infrastructure (formerly Northwest Pipe) remains a compelling play.

Final Note: Monitor trade policy developments and Q2 results for further clarity on margin recovery and backlog conversion.