Valmont Announces Fourth Quarter and Fiscal Year 2013 Results

        Valmont Announces Fourth Quarter and Fiscal Year 2013 Results  Highlights:  - Fourth quarter diluted earnings per share were $2.04 or $2.66 before the previously announced non-cash $0.62 negative impacts of an asset impairment and deconsolidation of Delta EMD. This compares to $2.43 diluted earnings per share reported in the fourth quarter of 2012. (See table on last page).  - Utility Support Structures Segment sales reached record fourth quarter levels.  - Irrigation Segment fourth quarter sales remained strong, declining only 6% behind last year's exceptional record fourth quarter levels.  - Sales and operational improvements in Engineered Infrastructure Products resulted in segment operating income as a percent of sales in the fourth quarter increasing to 10.0% from 5.3% in 2012.  PR Newswire  OMAHA, Neb., Feb. 20, 2014  OMAHA, Neb., Feb. 20, 2014 /PRNewswire/ -- Valmont Industries, Inc. (NYSE: VMI), a leading global provider of engineered products and services for infrastructure and mechanized irrigation equipment for agriculture, reported fourth quarter sales of $827.9 million compared with $815.0 million for the same period of 2012. Fourth quarter 2013 operating income was $100.7 million versus $111.7 million in 2012 and included $12.2 million of a non-cash fixed asset impairment charge at Delta EMD. Fourth quarter diluted earnings per share were $2.04 compared with $2.43 in 2012. Included in fourth quarter earnings per share is an additional non-cash after-tax loss in the amount of $12.0 million or $0.45 cents per share resulting from the deconsolidation of Delta EMD and Valmont's proportionate share of the after-tax Delta EMD fixed asset impairment in the amount of $4.6 million, or $0.17 per diluted share.  For fiscal 2013, sales were $3.3 billion versus $3.0 billion in 2012. Operating income for fiscal 2013 was $473.1 million versus $382.3 million in 2012. Valmont's fiscal year net earnings were $278.5 million, or $10.35 per diluted share ($10.97 before consideration of the Delta EMD impairment and deconsolidation), compared with 2012 fiscal year earnings of $234.1 million, or $8.75 per diluted share.  Fourth Quarter Review: "Led by an 8% revenue increase in the Engineered Infrastructure Products Segment, sales set another fourth quarter record. Fourth quarter revenue records were also achieved in the Utility Support Structures and Coatings Segments," said Mogens C. Bay, Valmont's Chairman and Chief Executive Officer. "As expected, Irrigation Segment sales were lower.  "Operating income as a percent of sales was similar to last year's levels before the fixed asset impairment at Delta EMD."  Fourth Quarter Segment Review: Utility Support Structures Segment (32% of 4th Quarter Sales) Steel and concrete structures for the global electric utility industry.  Sales of $264.7 million were 5% higher than 2012. North American sales increased and international sales declined.  The need to improve reliability by adding physical capacity and increase the interconnectivity of regional transmission grids in North America continues to drive significant utility investments in transmission infrastructure. Further demand comes from renewable energy sources requiring connectivity to the grid. During 2013, the Company added manufacturing capacity to support market growth and satisfy customer requirements for shorter lead times. These newly commissioned facilities can make traditional monopole utility structures and a new Valmont designed 'jumbo' sized pole to address the market's growing demand for even higher voltage transmission lines up to 745 kilovolts.  Operating income declined 5% to $45 million, which represents 17.0% of segment sales. Operating income improved in North America on improved sales pricing, mix and leverage of fixed costs, but this was more than offset by volume deleverage in international markets and an inventory write-down associated with the loss of a project in North Africa. Customers are placing orders with shorter lead-times as additional industry capacity brought supply and demand more into balance. This has resulted in a decline of approximately $100 million in our year-end backlog.  Irrigation Segment (23% of 4th Quarter Sales) Center pivot and linear move mechanized irrigation equipment and parts for agriculture in global markets.  Sales of $192.2 million declined 6% from last year's drought-driven record fourth quarter. In North America, the fourth quarter selling season reflected a more typical harvest season than last year. Last year's harvest was early, on account of dry conditions, which resulted in a more prolonged than usual fall selling season. The shorter selling season plus lower crop commodity prices contributed to the lower orders and sales, as evidenced by a decline in year-end backlogs. Growth continued in international markets.  While short-term swings in the farm economy can influence annual demand, long-term demand will be driven by the growing food needs of a rising global population and improving diets. To meet these needs, agriculture must increase its productivity. Competing demands on limited fresh water resources will drive agriculture to conserve water. Valmont's efficient irrigation products provide a lasting solution to these pressing problems, which we believe supports a favorable long-term outlook for this business.  Operating income was 22% lower than last year at $31.6 million or 16.5% of segment sales. The decline in operating income was a consequence of deleverage on lower volumes and planned business development efforts that increased SG&A expenses.  Engineered Infrastructure Products Segment (32% of 4th Quarter Sales) Lighting, traffic and highway safety products, wireless communication structures and components, and industrial gratings and access systems worldwide.  Fourth quarter sales were $267.2 million, an 8% increase over 2012. The increase was due to the contribution of Locker, an Australian engineered access systems company acquired in February of 2013, and higher sales of lighting and traffic products in North America.  Sales of lighting and traffic structures in Europe were slightly lower reflecting continued economic weakness and fiscal austerity measures throughout the region.  The additional sales from Locker more than offset the impact of a weaker Australian currency and economy on engineered access system sales.  Sales of wireless communication products were flat in North American markets and slightly lower in China.  Operating income doubled to $26.6 million, or 10.0% of segment sales. The improvement was the result of increased volumes in North America, the contribution of Locker, the benefit of cost reductions implemented in Europe and improved productivity in North America, Asia and Europe.  Coatings Segment (10% of 4th Quarter Sales) Hot-dip galvanizing, and other coatings to protect against corrosion of steel and aluminum in global markets.  Sales of $85.6 million were 3% higher than last year. The revenue contribution of Pure Metal, a Canadian galvanizing acquisition completed in late 2012, more than offset the impact of Australia's weaker currency and economy on sales.  The performance of the Pure Metal acquisition has met our expectations. We have benefited from the increased geographic diversification and exposure to the strong Canadian economy.  Operating income rose 6% to $18.1 million or 21.2% of segment sales primarily due to the contribution from the Pure Metal acquisition.  2013 Fiscal Year Review: "Record sales in all reportable segments drove significantly improved financial performance in 2013," said Mr. Bay. "Looking at results by segment, the Utility Support Structures Segment benefited from significant utility investments in the North American transmission grid. In the Irrigation Segment, historically high farm incomes drove annual sales gains in 2013. In the Engineered Infrastructure Products Segment, the first quarter acquisition of Locker in Australia plus improved sales in North America drove segment sales above $1 billion for the first time. Coatings Segment sales increased primarily due to a Canadian acquisition in late 2012.  "For the year, operating income as a percent of sales improved from 12.6% to 14.3%. The positive impact of acquisitions combined with operational leverage in all segments led to the increased operating income."  2014 Outlook: "We are facing a challenging first quarter comparison in light of last year's 47% first quarter earnings improvement," Mr. Bay said. "Last year we had exceptional irrigation results mainly driven by drought. This year's first quarter irrigation results will decline in comparison. In the utility business, we anticipate flat first quarter revenue due to less project activity in international markets. Operationally, severe weather has disrupted production and shipping in some of our facilities. This, plus some pricing pressure, will likely result in reduced first quarter utility profitability.  "Our present outlook is that first quarter 2014 earnings for the Company could be down around 25%. At this early stage in the year, we expect full year earnings to be slightly below 2013's $10.97 adjusted diluted earnings per share."  An audio discussion of Valmont's fourth quarter results by Mogens C. Bay, Chairman and Chief Executive Officer and Terry J. McClain, Executive Vice President and Chief Financial Officer, will be available live by telephone by dialing 1-877-493-2981 and entering Conference ID#:  50490339 or via the Internet at 8:00 a.m. CST February 21, 2014, 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#:  50490339 beginning February 21, 2014 at 10:00 a.m. CST through 12:00 p.m. CST on February 28, 2014.  Valmont 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) (unaudited)                         Fourth Quarter             Year-to-Date                         13 Weeks Ended             52 Weeks Ended                         28-Dec-13     29-Dec-12    28-Dec-13      29-Dec-12 Net sales               $  827,890  $          $ 3,304,211   $ 3,029,541                                       815,037 Cost of sales           605,066       590,692      2,358,983      2,227,085  Gross profit  222,824       224,345      945,228        802,456 Selling, general and administrative          122,111       112,601      472,159        420,160 expenses  Operating     100,713       111,744      473,069        382,296 income Other income (expense)  Interest expense   (8,138)       (7,968)      (32,502)       (31,625)  Interest income    1,712         2,191        6,477          8,272  Other              1,278         (560)        2,373          347                         (5,148)       (6,337)      (23,652)       (23,006)  Earnings before income taxes and equity in   earnings of   95,565        105,407      449,417        359,290 nonconsolidated subsidiaries Income tax expense      31,728        39,497       157,781        126,502  Earnings before equity in earnings of                 63,837        65,910       291,636        232,788 nonconsolidated subsidiaries Equity in earnings of nonconsolidated         287           817          835            6,128 subsidiaries Loss from deconsolidation of      (12,011)      -            (12,011)       - subsidiary  Net earnings  52,113        66,727       280,460        238,916 Less: Earnings attributable to         2,755         (1,691)      (1,971)        (4,844) non-controlling interests  Net earnings attributable to         $           $         $   278,489  $   Valmont Industries,     54,868       65,036                      234,072 Inc. Average shares outstanding (000's) -   26,667        26,502       26,641         26,471 Basic Earnings per share -    $         $       $          $      Basic                   2.06         2.45         10.45          8.84 Average shares outstanding (000's) -   26,909        26,806       26,899         26,764 Diluted Earnings per share -    $         $       $          $      Diluted                 2.04         2.43         10.35          8.75 Cash dividends per      $          $        $          $     share                   0.250        0.225        0.975          0.855    VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OPERATING RESULTS (Dollars in thousands) (unaudited)                          Fourth Quarter           Year-to-Date                          13 Weeks Ended           52 Weeks Ended                          28-Dec-13     29-Dec-12  28-Dec-13      29-Dec-12 Net sales  Engineered          $  267,220  $        $ 1,001,809   $   931,533 Infrastructure Products                247,106  Utility Support     264,737       252,556    962,038        873,520 Structures  Coatings            85,583        83,155     357,635        334,552  Infrastructure   617,540       582,817    2,321,482      2,139,605 products  Irrigation          192,177       203,427    882,179        750,641  Other               70,211        82,980     303,595        328,737  Less: Intersegment  (52,038)      (54,187)   (203,045)      (189,442) sales  Total          $  827,890  $        $ 3,304,211   $ 3,029,541                                        815,037 Operating Income  Engineered          $           $       $           $    Infrastructure Products  26,621       13,106     87,647         54,013  Utility Support     44,973        47,124     174,740        129,025 Structures  Coatings            18,112        17,070     74,917         71,641  Infrastructure   89,706        77,300     337,304        254,679 products  Irrigation          31,620        40,450     181,498        143,605  Other              (2,806)       13,162     30,984         46,575  Corporate           (17,807)      (19,168)   (76,717)       (62,563)  Total          $  100,713  $        $   473,069  $   382,296                                        111,744    The backlog of orders for the principal products manufactured and marketed was $666.6 million at the end of the 2013 fiscal year and $902.5 million at the end of the 2012 fiscal year. We anticipate that most of the backlog of orders will be filled during fiscal year 2014. At year-end, the segments with backlog were as follows (dollar amounts in millions):                                       28-Dec-13          29-Dec-12 Engineered Infrastructure Products $      201   $      212 Utility Support Structures         334                434 Irrigation                         104                231 Coatings                           1                  1 Other                              26                 25                                      $      666   $      903    Valmont has four reportable segments based on its reporting structure. 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 services. 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 offorged 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) (unaudited)                                            28-Dec-13          29-Dec-12 ASSETS Current assets:  Cash and cash equivalents             $   613,706      $   414,129  Accounts receivable, net              515,440            515,902  Inventories                           380,000            412,384  Prepaid expenses                      22,997             25,144  Refundable and deferred income taxes  65,697             58,381  Total current assets             1,597,840          1,425,940 Property, plant and equipment, net         534,210            512,612 Goodwill and other assets                  644,444            629,999                                            $ 2,776,494       $ 2,568,551 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities:  Current installments of long-term     $      202   $      224 debt  Notes payable to banks                19,024             13,375  Accounts payable                      216,121            212,424  Accrued expenses                      194,527            180,408  Dividend payable                      6,706              6,002  Total current liabilities        436,580            412,433 Long-term debt, excluding current          470,907            472,593 installments Other long-term liabilities                324,161            276,515 Shareholders' equity                       1,544,846          1,407,010                                            $ 2,776,494       $ 2,568,551    VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS REGULATION G RECONCILIATION (Dollars in thousands) (unaudited) Non-recurring items listed below relate to: a non-cash after-tax loss associated with the deconsolidation of Delta EMD Pty. Ltd (EMD) and Valmont's proportionate share of an after-tax loss related to a fixed asset impairment recorded by EMD in the fourth quarter of 2013.                        Quarter    Diluted        Year ended     Diluted                        ended      earnings       December 28,   earnings                        December   per share      2013           per share                        28, 2013 Net earnings attributable to        $       $          $            $     Valmont Industries,    54,868     2.04          278,489        10.35 Inc. - as reported Fixed asset impairment 4,569      0.17           4,569          0.17 charge - after tax Deconsolidation of     12,011     0.45           12,011         0.45 Delta EMD - after tax Net earnings attributable to        $       $          $            $     Valmont Industries,    71,448     2.66          295,069        10.97 Inc. - Adjusted  SOURCE Valmont Industries, Inc.  Website: http://www.valmont.com Contact: Jeff Laudin, Phone, 402-963-1158, Fax, 402-963-1198