PW Eagle Inc. officials are back in expansion mode and flirting with the possibility of taking the company private.
``Based on our performance, we're back,'' Bill Spell, chief executive officer, said in an Oct. 29 telephone interview. ``We're going to start where we left off about a year and a half ago. You don't want to make a big deal about it. It tells us that we have survived a rough year and a half.''
Officials from the Minneapolis-based pipe extrusion firm would not provide any details on the expansion. They would say only that the investment will be in the ``multiple millions'' to upgrade equipment and boost efficiency.
Roger Robb, chief financial officer, said the plan was approved in the third quarter and activities will continue through 2003. The firm has eight facilities in operation: Hastings, Neb.; Tacoma and Sunnyside, Wash.; Eugene, Ore.; West Jordan, Utah; and Cameron Park, Visalia and Perris, Calif. Its Phoenix facility remains idled.
``We've maintained it, we own it, and at the appropriate time, we'll make a decision on how to proceed,'' Spell said.
The mood is different from a year ago, when officials took several initiatives to ease the business through an uncertain period. But they expect a promising 2003, with economic improvement and supplies of PVC resin and pipe staying in balance with demand.
For its third quarter, the company reported profit of $4.1 million on sales of $63.5 million, compared to a loss of $5.3 million on sales of $65.5 million in the same period last year. For the first nine months of 2002, the firm reported profit of $4.61 million on sales of $193 million, vs. a loss of $7.22 million on sales of $197.8 in the 2001 period.
``We're going to continue to manage conservatively, waiting for the other shoe to drop, whether it be terrorism, the economy, perhaps war or other external factors,'' Spell told shareholders. ``We're going to be very cautious about how we spend our money.''
PW was very aggressive with capital expenditures before 2001's rocky environment, Robb said. In the preceding five-year period, the firm invested $60 million.
Lee Schafer, managing director with Blue Fire Research in Minneapolis, said the investment plan is appropriate.
``I'm confident that the management team in Oregon knows how to spend money,'' Schafer said in an Oct. 29 telephone interview. ``They see more opportunities to enhance the franchise.''
The next two years may hold other changes for PW. Officials are considering an initiative to maximize shareholder value on stock that has been trading at low volumes. Options include a merger, acquisition, going private or a stock buyback.
PW Eagle stock was trading Oct. 30 at $3.90 a share. Its 52-week high was $7.50.
``We know that this particular company is controlled by professional investors and they are keenly interested in maximizing investment,'' Schafer said, noting that Spell Capital Partners is not involved with any other public companies.
``They've got a good group of operating guys in Oregon and a good group of strategic guys in Minneapolis. They deleveraged the company and when you deleverage, you have more options.''