Valmont Announces First Quarter 2013 Results
- First quarter sales increased 14%, operating income rose 43%.
- First quarter net earnings increased 48%, fully diluted earnings per share
- First quarter Utility Support Structures Segment sales rose 25%, operating
income increased 84%.
- First quarter Irrigation Segment sales improved 25%, operating income
OMAHA, Neb., April 18, 2013
OMAHA, Neb., April 18, 2013 /PRNewswire/ -- Valmont Industries, Inc. (NYSE:
VMI), a leading global provider of engineered products and services for
infrastructure and mechanized irrigation equipment for agriculture, reported
first quarter sales of $819.6 million compared with $717.4 million for the
same period of 2012. First quarter 2013 operating income was $118.2 million
versus $82.8 million in 2012. First quarter net income was $77.6 million
versus $52.3 million in 2012, which resulted in an increase in quarterly
diluted earnings per share from $1.96 in 2012 to $2.89 in 2013.
During the quarter, the Company divested a non-consolidated South African
subsidiary. As a consequence, a $3.2 million benefit, ($0.12 earnings per
share), was realized due to the release of certain deferred tax liabilities
and corresponding reduction in tax expense. This reduced the first quarter
corporate tax rate to 31.0%. On February 4, 2013, the Company acquired
Australian based Locker Group, a manufacturer of perforated and expanded metal
and access systems. In addition, the first full quarter of results from the
December 2012 acquisition of Pure Metal, a Canadian galvanizing operation,
were realized during the quarter. Management estimates the positive collective
impact of the above items on first quarter revenue and diluted earnings per
share were approximately $19.8 million and $0.07 per-share respectively.
First Quarter Review:
Two of Valmont's segments, Utility Support Structures and Irrigation, each had
25% year-over-year sales increases. Sales growth was also realized in our
Engineered Infrastructure Products and Coatings segments, in part due to
Quarterly operating income rose primarily due to increased volumes combined
with favorable mix in the Utility Support Structures and Irrigation Segments,
where strong demand allowed efficient use of our manufacturing facilities.
Quarterly operating income as a percent of net sales increased to 14.4% from
last year's 11.5%, driven by higher gross profit margins and volume leverage.
First Quarter Segment Review:
Utility Support Structures Segment(27% of 1st Quarter Sales)
Steel and concrete structures for the global electric utility industry.
Sales of $239.6 million were 25% higher than 2012, driven by increased demand
for transmission structures in North America, combined with higher
international utility sales, which were largely driven by projects shipped
during the quarter.
The greatest driver of North American demand is the ongoing expansion of the
nation's transmission grid. To increase the capacity of the grid while also
improving its interconnectivity and reliability, electric utilities are making
substantial investments in transmission infrastructure. Utility customers are
drawing upon Valmont's engineering capability and manufacturing capacity to
support this substantial long-term undertaking. With 14 utility manufacturing
facilities in North America, and a global network of large-pole plants, we
believe Valmont is well positioned to maintain a leadership role as the
utility industry continues to expand the grid.
The main drivers of international sales growth were utility structures demand
in Australia, and project sales to developing markets.
Operating income rose 84% to $46.2 million, which represents 19.3% of sales.
The increase in operating income was due to a favorable mix of sales and the
positive impact of volume and SG&A leverage.
Irrigation Segment (28% of 1st Quarter Sales)
Center pivot and linear move mechanized irrigation equipment and parts for
agriculture in global markets.
Sales rose 25% to $244.7 million, primarily led by increased North American
demand. Historically high crop commodity prices and farm income helped drive
record first quarter sales. Following last summer's severe drought in North
America, heightened appreciation of the benefits of mechanized irrigation lent
additional support to demand.
In international markets, sales increased, although at a lower rate than in
North America. Strong global crop demand and historically high farm income
levels contributed to the sales increase.
The long-term drivers for the irrigation market remain compelling. World
population growth and dietary improvement create a need for increased food
supplies. Limits to water availability create pressures on agriculture to
reduce its share of water use. Valmont's mechanized irrigation equipment helps
address these global dilemmas by improving farm production and using water
Operating income grew 42% to $54.6 million and was 22.3% of segment sales. The
improvement in operating income was due to strong volumes and favorable
Engineered Infrastructure Products Segment(26% of 1st Quarter Sales)
Lighting, traffic and highway safety products, wireless communication
structures and components, and industrial gratings and access systems
First quarter sales were $223.7 million, a 10% increase over 2012. While total
segment sales rose, the increase essentially reflects the addition of Locker
Group and higher intercompany sales.
In North America, lighting and traffic products sales were similar to last
year. Lighting and traffic product sales in Europe were below last year's
levels mostly due to continued economic weakness in the region.
Webforge engineered access systems, and highway products sales were comparable
to last year in the Asia-Pacific region.
Wireless communication structures and components sales rose in North America
and declined in China.
The current global lighting and traffic market environment remains under
pressure as government spending is constrained by austerity measures. This
leads to a highly competitive market and a weak pricing environment. Wireless
communication product sales are currently benefitting from increased
deployment of 4G technologies. Other businesses within Engineered
Infrastructure Products participate in diverse markets and are supported at
historic demand levels.
Valmont believes that investments in infrastructure are necessary to drive
economic growth. With its diverse mix of Engineered Infrastructure Products,
Valmont is well positioned to participate in economic development around the
Despite mostly weak markets, the quality of earnings in this segment improved.
Operating income was $12.7 million, or 5.7% of segment sales compared with
last year's 4.0%. This increase was primarily driven by improvements in North
American wireless communication products, intercompany sales and a lower cost
structure than last year.
Coatings Segment (10% of 1st Quarter Sales)
Hot-dip galvanizing, and other coatings to protect against corrosion of steel
and aluminum in global markets.
Sales of $89.2 million were 8% higher than last year driven by the acquisition
of Pure Metal. In the Asia-Pacific region, sales declined due to reduced
volumes and a more competitive market environment in Australia.
Operating income declined 19% to $13.4 million, or 15.0% of segment sales due
to the reduction in Australian volumes, integration costs tied to the Pure
Metal acquisition and unfavorable factory productivity in certain galvanizing
"Our outlook for the Utility Support Structures Segment is improving for the
year," said Mogens C. Bay, Valmont's Chairman and Chief Executive Officer. "As
is always the case, Utility Support Structures operating margins may vary from
quarter to quarter, depending on sales mix and the timing of shipments.
"In the Irrigation Segment, given the current backlog, we are expecting a
strong second quarter. Second-half demand will largely be based on growing
conditions, commodity prices and the expectations for farm income later in the
"In the Engineered Infrastructure Products Segment, we are moving into the
seasonally stronger time of year. When combined with actions taken over the
past few years to streamline costs, we expect improved sales and operating
comparisons in the Engineered Infrastructure Products Segment for the rest of
"We expect Coatings Segment performance to improve over the balance of the
year as we move to fully integrate the Pure Metal acquisition and expect
improved demand in Australia.
"In summary, with the strong first quarter results, the continued strength in
the utility markets and the anticipated improvement in Engineered
Infrastructure Products, it should be possible for us to exceed our February
guidance even if Irrigation results in the second half were below 2012's
record second half levels," said Mr. Bay.
An audio discussion of Valmont's first quarter results by Mogens C. Bay,
Chairman and Chief Executive Officer and Richard P. Heyse, Executive Vice
President and Chief Financial Officer, will be available live by telephone by
dialing 1-877-493-2981 and entering Conference ID#: 98701424 or via the
Internet at 8:00 a.m. CDT April 19, 2013, by pointing browsers to:
http://www.valmont.com/page.aspx?id=445&pid=21. After the event you may listen
by accessing the above link or by telephone. Dial 1-855-859-2056 or
404-537-3406, and enter the Conference ID#: 98701424 beginning April 19,
2013 at 10:00 a.m. CDT through 12:00 p.m. CDT on April 26, 2013.
Valmont is a global leader in designing and manufacturing poles, towers and
structures for lighting and traffic, wireless communication and utility
markets, industrial access systems, highway safety barriers and a provider of
protective coating services. Valmont also leads the world in mechanized
irrigation equipment for agriculture, enhancing food production while
conserving and protecting natural water resources. In addition, Valmont
produces a wide variety of tubing for commercial and industrial applications.
This release contains forward-looking statements, within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based on assumptions that management has made in light of
experience in the industries in which Valmont operates, as well as
management's perceptions of historical trends, current conditions, expected
future developments and other factors believed to be appropriate under the
circumstances. As you read and consider this release, you should understand
that these statements are not guarantees of performance or results. They
involve risks, uncertainties (some of which are beyond Valmont's control) and
assumptions. Although management believes that these forward-looking
statements are based on reasonable assumptions, you should be aware that many
factors could affect Valmont's actual financial results and cause them to
differ materially from those anticipated in the forward-looking statements.
These factors include among other things, risk factors described from time to
time in Valmont's reports to the Securities and Exchange Commission, as well
as future economic and market circumstances, industry conditions, company
performance and financial results, operating efficiencies, availability and
price of raw material, availability and market acceptance of new products,
product pricing, domestic and international competitive environments, and
actions and policy changes of domestic and foreign governments. The Company
cautions that any forward-looking statement included in this press release is
made as of the date of this press release and the Company does not undertake
to update any forward-looking statement.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
13 Weeks Ended
Net sales $ 819,630 $ 717,350
Cost of sales 584,261 531,036
Gross profit 235,369 186,314
Selling, general and administrative expenses 117,179 103,496
Operating income 118,190 82,818
Other income (expense):
Interest expense (8,190) (7,807)
Interest income 1,353 2,078
Other 1,556 1,577
Earnings before income taxes and equity
earnings of nonconsolidated 112,909 78,666
Income tax expense 34,973 27,766
Earnings before equity in earnings of
nonconsolidated subsidiaries 77,936 50,900
Equity in earnings of nonconsolidated subsidiaries 204 1,688
Net earnings 78,140 52,588
Less: Earnings attributable to non-controlling (571) (263)
Net earnings attributable to Valmont $ 77,569 $ 52,325
Average shares outstanding (000's) - Basic 26,583 26,396
Earnings per share - Basic $ 2.92 $ 1.98
Average shares outstanding (000's) - Diluted 26,859 26,678
Earnings per share - Diluted $ 2.89 $ 1.96
Cash dividends per share $ 0.225 $ 0.180
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
13 Weeks Ended
Engineered Infrastructure Products $ 223,670 $ 203,927
Utility Support Structures 239,638 191,232
Coatings 89,245 82,847
Irrigation 244,707 196,266
Other 77,869 86,063
Total 875,129 760,335
Engineered Infrastructure Products (29,452) (18,420)
Utility Support Structures (411) (1,980)
Coatings (14,330) (12,697)
Irrigation - (425)
Other (11,306) (9,463)
Total (55,499) (42,985)
Engineered Infrastructure Products 194,218 185,507
Utility Support Structures 239,227 189,252
Coatings 74,915 70,150
Irrigation 244,707 195,841
Other 66,563 76,600
Total $ 819,630 $ 717,350
Engineered Infrastructure Products $ 12,734 $ 8,024
Utility Support Structures 46,155 25,104
Coatings 13,420 16,512
Irrigation 54,559 38,408
Other 10,787 11,411
Corporate (19,465) (16,641)
Total $ 118,190 $ 82,818
Valmont has aggregated its business segments into four reportable segments as
Engineered Infrastructure Products:This segment consists of the manufacture of
engineered metal structures and components for global lighting and traffic,
wireless communication, roadway safety and access systems applications.
Utility Support Structures:This segment consists of the manufacture of
engineered steel and concrete structures for the global utility industry.
Coatings:This segment consists of global galvanizing, painting and anodizing
Irrigation:This segment consists of the manufacture of agricultural irrigation
equipment and related parts and services worldwide.
In addition to these four reportable segments, Valmont also has other
businesses that individually are not more than 10% of consolidated net sales.
These businesses, which include the manufacture of forged steel grinding
media, tubular products, electrolytic manganese dioxide and industrial
fasteners, are reported in the "Other" category.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
Cash and cash equivalents $ 419,996 $ 339,568
Accounts receivable, net 503,933 450,280
Inventories 451,257 440,600
Prepaid expenses 33,555 27,881
Refundable and deferred income taxes 61,745 42,263
Total current assets 1,470,486 1,300,592
Property, plant and equipment, net 534,350 469,332
Goodwill and other assets 612,408 613,045
$ 2,617,244 $ 2,382,969
LIABILITIES AND SHAREHOLDERS' EQUITY
Current installments of long-term debt $ 189 $ 264
Notes payable to banks 13,324 12,293
Accounts payable 211,572 214,474
Accrued expenses 163,616 151,386
Income taxes payable 16,061 21,269
Dividend payable 6,020 4,778
Total current liabilities 410,782 404,464
Long-term debt, excluding current 472,249 474,015
Other long-term liabilities 270,288 223,487
Shareholders' equity 1,463,925 1,281,003
$ 2,617,244 $ 2,382,969
SOURCE Valmont Industries, Inc.
Contact: Jeff Laudin, Phone: 402-963-1158, Fax: 402-963-1198
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