OMAHA, Neb., April 20, 2016 /PRNewswire/ -- Valmont
Industries, Inc. (NYSE: VMI), a leading
global provider of engineered products and services for
infrastructure development and mechanized irrigation equipment and
services for agriculture, today reported first quarter results.
- Revenues of $596.6 million were
down 11% year-over-year, reflecting negative foreign currency
translation and the revenue impact of significantly lower steel
costs
- Operating income rose 8% to $62.4
million, which included $1.1
million negative foreign exchange impact; operating income
was 10.5% of net sales, compared with 8.6% in 2015
- Diluted EPS increased 13% to $1.45 compared with $1.28 in 2015 due to restructuring, improved
productivity and continued cost-cutting initiatives
- Free cash flow for the quarter totaled $66.5 million and the cash balance was
$388 million
- The Company repurchased 154,000 shares for $17 million during the quarter; $169 million remains on the current
authorization
- The Company is reaffirming 2016 annual guidance of diluted EPS
up 12-15% from 2015 adjusted EPS of $5.63
"The positive impacts of cost savings associated with last
year's restructuring, productivity improvements beyond
restructuring, and lower input costs contributed to improved
profitability despite challenging end markets," said Mogens C. Bay, Valmont's Chairman and Chief
Executive Officer. "We remain committed to delivering solid
earnings growth this year."
|
First
Quarter
|
Summarized
Financial Info.
|
13 Weeks
Ended
|
|
26-Mar-16
|
|
28-Mar-15
|
Net sales
|
$ 596,605
|
|
$ 670,398
|
Operating
income
|
62,365
|
|
57,684
|
Operating
income as a % of net sales
|
10.5%
|
|
8.6%
|
Net earnings -
GAAP
|
32,969
|
|
30,739
|
Net earnings -
Adjusted *
|
33,954
|
|
30,649
|
|
|
|
|
Diluted EPS - GAAP
net earnings
|
$ 1.45
|
|
$ 1.28
|
Average Shares
Oustanding - Diluted
|
22,816
|
|
23,982
|
|
|
|
|
Diluted EPS -
Adjusted net earnings *
|
$ 1.49
|
|
$ 1.28
|
|
|
|
|
Average Shares
Oustanding - Diluted
|
22,816
|
|
23,982
|
|
|
|
|
* Please see Reg. G
reconciliation table on last page.
|
|
|
First Quarter Segment Review
Infrastructure-related
Engineered Support Structures (30% of Sales)
Poles, towers and components for the global lighting, traffic
and wireless communication markets, and highway safety
products.
First quarter sales of $177.0
million were comparable to last year, despite negative
currency translation of $5.6 million.
Improved sales in Asia Pacific
were more than offset by lower project sales in Europe.
In North America, sales of
lighting and traffic products were comparable with last year, with
stronger U.S. sales in the commercial lighting market offsetting
lower sales in Canada. Wireless
communication product sales remain subdued in the US.
In Europe, Middle East and Africa, lighting and traffic structure sales
declined year-over-year on difficult comps as the prior period
reflected an export project in the Middle
East. Sales in Europe were
similar to last year.
In the Asia-Pacific region,
wireless communication structure sales rose significantly amid the
continued rollout of 4G wireless technology over broader regions of
China. Other highway and pole
businesses in the region remained comparable to last year.
Operating income rose 50% to $14.2
million or 8.0% of sales compared with operating income of
$9.5 million or 5.3% of sales in
2015. The increase was driven by restructuring and cost reduction
efforts, lower raw material prices, improved operating performance
in North America, and volume
leverage in the Asia Pacific
region.
Utility Support Structures (24% of Sales)
Steel and concrete structures for the global electric utility
industry.
Sales of $144.5 million decreased
18% year-over-year due to lower volume and lower selling prices per
ton, reflecting the impact of lower steel costs and mix shift
toward smaller structures. International sales were lower than last
year.
Operating income was $14.8 million
compared to $15.4 million in 2015.
Operating income as a percent of sales increased to 10.2% from
8.7%, reflecting the positive impact of restructuring and ongoing
operational improvements.
Coatings Segment (12% of Sales)
Global galvanizing, painting and anodizing services.
Sales of $68.6 million were 8%
lower than last year due to reduced sales in the Asia Pacific region; half of the decline was
unfavorable currency translation. In North America, sales were comparable with
2015, including the revenue contribution from American Galvanizing,
acquired in the fourth quarter of 2015.
Operating income of $11.4 million
grew 4% over last year's $11.0
million. Operating income as a percent of sales rose to
16.6% from 14.8% as a result of the favorable impact of 2015
restructuring initiatives and lower natural gas and zinc costs.
Energy and Mining Segment (12% of Sales)
Offshore structures, engineered access systems and grinding
media.
Sales of $72.5 million reflect
declines in all product lines leading to an 18% decrease from last
year. Sales of wind tower products were firm, while other offshore
structure sales were lower, negatively impacted by continued
depressed oil prices. Weak energy and mining markets weighed on
Access Systems results in Asia
Pacific, although sales in civil and architectural markets
improved. Grinding media revenues softened amid continued sluggish
mining activity in Australia and
also reflect the impact of lower-cost steel.
Operating income was $1.9 million
compared with $4.4 million last year,
a 56% decline. Operating income as a percent of sales was 2.6%
reflecting the influence of lower oil and energy prices and reduced
mining activity in Australia on
segment performance. Last year's restructuring dampened the impact
of the weaker markets on operating performance.
Agriculture-related
Irrigation Segment (27% of Sales)
Agricultural irrigation equipment, parts, services and tubular
products.
Irrigation Segment sales declined 9% to $158.5 million mostly due to reduced North America irrigation equipment and tubing
sales. Irrigation equipment sales in North America were pressured by a reduction in
net farm income. International irrigation equipment sales decreased
due to the impact of currency translation. The international
irrigation markets are highly diverse and benefitted from increased
project activity in Eastern Europe
and the Middle East that more than
offset declines in other markets. Tubing sales were significantly
lower due to reduced demand from agricultural equipment
manufacturers and continued low steel prices.
Operating income of $28.8 million
was modestly below last year's $30.2
million due to the weakness in tubing markets. Operating
income as a percent of sales improved to 18.2% from 17.3% last year
mainly due to cost management, improved productivity and lower raw
material cost.
Outlook:
"The result of the restructuring activities of last year are
manifested in our improved profitability despite lower first
quarter revenues," Mr. Bay said. "For the balance of the year, we
expect revenues more in line with last year and are reaffirming
annual guidance."
"We continue to operate in a challenging external environment
but continue to control what we can do to drive improved
profitability. The positive long-term, global drivers for our
businesses remain in place. Efficient use of water for food
production will only increase in urgency and economic growth cannot
be sustained without investments in the world's infrastructure. We
believe we are well positioned to participate in these
opportunities."
An audio discussion of Valmont's first quarter results
will be available live by Telephone by dialing 1-877-493-2981 and
entering Conference ID#: 15295782 or via Webcast at
8:00 a.m. CDT April 21, 2016 at
https://engage.vevent.com/rt/valmontindustries_ao~42116. A
replay is available through the above link or by telephone
(877-493-2981 or 404-537-3406, Conference ID#: 15295782)
beginning April 21, 2016 at
10:00 a.m. CDT through 12:00 p.m. CDT on April
28, 2016. The Company's slide presentation to be used by
management for the call is available on Form 8-K filed April 21, 2016 with the Securities and Exchange
Commission.
Valmont is a global leader, designing and manufacturing highly
engineered products that support global infrastructure development
and agricultural productivity. Its products for infrastructure
serve highway, transportation, wireless communication, electric
transmission, and industrial construction and energy markets. Its
mechanized irrigation equipment for large scale agriculture
improves farm productivity while conserving fresh water resources.
In addition, Valmont provides coatings services that protect
against corrosion and improve the service lives of steel and other
metal products.
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)
|
|
|
|
|
|
First
Quarter
|
|
13 Weeks
Ended
|
|
26-Mar-16
|
|
28-Mar-15
|
Net sales
|
$ 596,605
|
|
$ 670,398
|
Cost of
sales
|
435,636
|
|
504,944
|
Gross profit
|
160,969
|
|
165,454
|
Selling, general and
administrative expenses
|
98,604
|
|
107,771
|
Operating income
|
62,365
|
|
57,683
|
Other income
(expense):
|
|
|
|
Interest expense
|
(11,054)
|
|
(11,128)
|
Interest income
|
811
|
|
875
|
Other
|
(1,678)
|
|
1,016
|
|
(11,921)
|
|
(9,237)
|
Earnings before income taxes and equity in
|
|
|
|
earnings of nonconsolidated subsidiaries
|
50,444
|
|
48,446
|
Income tax
expense
|
16,273
|
|
16,939
|
Net earnings
|
34,171
|
|
31,507
|
Less: Earnings
attributable to non-controlling interests
|
(1,202)
|
|
(768)
|
Net earnings attributable to Valmont Industries, Inc.
|
$
32,969
|
|
$
30,739
|
|
|
|
|
|
|
|
|
Average shares
outstanding (000's) - Basic
|
22,700
|
|
23,868
|
Earnings per share -
Basic
|
$
1.45
|
|
$
1.29
|
|
|
|
|
Average shares
outstanding (000's) - Diluted
|
22,816
|
|
23,982
|
Earnings per share -
Diluted
|
$
1.45
|
|
$
1.28
|
|
|
|
|
Cash dividends per
share
|
$
0.375
|
|
$
0.375
|
VALMONT
INDUSTRIES, INC. AND SUBSIDIARIES
|
SUMMARY OPERATING
RESULTS
|
(Dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
First
Quarter
|
|
13 Weeks
Ended
|
|
26-Mar-16
|
|
28-Mar-15
|
Sales
|
|
|
|
Engineered Support
Structures
|
$ 176,971
|
|
$ 177,904
|
Energy &
Mining
|
$ 72,449
|
|
88,061
|
Utility Support
Structures
|
144,520
|
|
176,341
|
Coatings
|
68,581
|
|
74,360
|
Infrastructure products
|
462,521
|
|
516,666
|
|
|
|
|
Irrigation
|
158,514
|
|
174,577
|
Other
|
-
|
|
2,169
|
Less: Intersegment
sales
|
(24,430)
|
|
(23,014)
|
Total
|
$
596,605
|
|
$
670,398
|
|
|
|
|
Operating
Income
|
|
|
|
Engineered Support
Structures
|
$ 14,208
|
|
$ 9,450
|
Energy &
Mining
|
1,903
|
|
4,366
|
Utility Support
Structures
|
14,768
|
|
15,357
|
Coatings
|
11,413
|
|
10,999
|
Infrastructure products
|
42,292
|
|
40,172
|
|
|
|
|
Irrigation
|
28,844
|
|
30,174
|
Other
|
-
|
|
(1,108)
|
Corporate
|
(8,771)
|
|
(11,555)
|
Total
|
$
62,365
|
|
$
57,683
|
|
Valmont has
aggregated its business segments into five reportable segments as
follows:
|
|
Engineered
Support Structures:This segment consists of the manufacture
of engineered metal structures and components for global lighting
and traffic, wireless communication, and roadway
safety.
|
|
Energy and
Mining: This segment includes the manufacture of access
systems applications, forged steel grinding media, and offshore oil
and gas and wind energy structures;
|
|
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, related
parts, and services worldwide as well as tubular products for
industrial customers.
|
VALMONT
INDUSTRIES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
26-Mar-16
|
|
|
28-Mar-15
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$ 387,714
|
|
|
$ 318,366
|
Accounts receivable,
net
|
449,379
|
|
|
503,649
|
Inventories
|
350,768
|
|
|
379,514
|
Prepaid expenses
|
46,080
|
|
|
48,344
|
Refundable and deferred
income taxes
|
18,897
|
|
|
53,032
|
Total current assets
|
1,252,838
|
|
|
1,302,905
|
Property, plant and
equipment, net
|
532,507
|
|
|
586,745
|
Goodwill and other
assets
|
614,517
|
|
|
694,479
|
|
$
2,399,862
|
|
|
$
2,584,129
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current installments of
long-term debt
|
$ 1,110
|
|
|
$ 1,070
|
Notes payable to
banks
|
2,402
|
|
|
14,459
|
Accounts payable
|
183,059
|
|
|
189,349
|
Accrued expenses
|
169,479
|
|
|
169,823
|
Dividend payable
|
8,527
|
|
|
8,889
|
Total current liabilities
|
364,577
|
|
|
383,590
|
Long-term debt,
excluding current installments
|
756,878
|
|
|
765,762
|
Other long-term
liabilities
|
298,256
|
|
|
290,913
|
Shareholders'
equity
|
980,151
|
|
|
1,143,864
|
|
$
2,399,862
|
|
|
$
2,584,129
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(unaudited) and
dollars in thousands
|
|
|
|
|
|
|
|
13 Weeks
Ended
|
|
|
13 Weeks
Ended
|
|
|
26-Mar-16
|
|
|
28-Mar-15
|
|
Cash flows from
operating activities
|
|
|
|
|
|
Net
Earnings
|
$
34,171
|
|
|
$
31,507
|
|
Depreciation and amortization
|
20,598
|
|
|
23,901
|
|
Contribution to defined benefit pension plan
|
-
|
|
|
(15,735)
|
|
Change
in working capital
|
16,427
|
|
|
4,802
|
|
Other
|
9,331
|
|
|
11,053
|
|
Net cash
flows from operating activities
|
80,527
|
|
|
55,528
|
|
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
|
Purchase
of property, plant, and equipment
|
(13,961)
|
|
|
(16,615)
|
|
Other
|
(2,180)
|
|
|
3,115
|
|
Net cash
flows from investing activities
|
(16,141)
|
|
|
(13,500)
|
|
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
|
Principal payments on long-term borrowings
|
(220)
|
|
|
(224)
|
|
Purchase
of treasury shares
|
(16,939)
|
|
|
(72,900)
|
|
Dividends paid
|
(8,571)
|
|
|
(9,086)
|
|
Other
|
2,356
|
|
|
(186)
|
|
Net cash
flows from financing activities
|
(23,374)
|
|
|
(82,396)
|
|
Effect of exchange
rates on cash and cash equivalents
|
(2,372)
|
|
|
(12,845)
|
|
Net change in cash
and cash equivalents
|
38,640
|
|
|
(53,213)
|
|
Cash and cash
equivalents - beginning of year
|
349,074
|
|
|
371,579
|
|
Cash and cash
equivalents - end of period
|
$
387,714
|
|
|
$
318,366
|
|
VALMONT
INDUSTRIES, INC. AND SUBSIDIARIES
|
SUMMARY OF EFFECT
OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED
RESULTS
|
REGULATION G
RECONCILIATION
|
(Dollars in
thousands)
|
(unaudited)
|
The schedule below
details the non-cash after-tax loss/(gain) recorded to adjust the
shares of Delta EMD Pty. Ltd (Delta EMD) to its quoted market price
(fair value) at each quarter-end. It also discloses the after-tax
restructuring expense recognized in fiscal 2015. Earnings per
share for each item are calculated separately. Therefore the sum of
earnings per share amounts for each item below may not agree with
the total. We believe it is useful when considering company
performance for the non-GAAP adjusted net earnings to be taken into
consideration by management and investors with the related reported
GAAP measures.
|
|
|
|
|
|
|
|
|
Quarter ended
March 26,
2016
|
Diluted
earnings per
share
|
|
Quarter ended
March 28,
2015
|
|
Diluted
earnings per
share
|
Net earnings
attributable to Valmont Industries, Inc. - as reported
|
$ 32,969
|
$
1.45
|
|
$ 30,739
|
|
$
1.28
|
|
|
|
|
|
|
|
Fair market value
adjustment, Delta EMD - after-tax
|
985
|
0.04
|
|
(600)
|
|
(0.03)
|
|
|
|
|
|
|
|
Restructuring Expense
(pre-tax $785 in 2015)
|
-
|
-
|
|
510
|
|
0.02
|
|
|
|
|
|
|
|
Net earnings
attributable to Valmont Industries, Inc. - Adjusted
|
$ 33,954
|
$
1.49
|
|
$ 30,649
|
|
$
1.28
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/valmont-reports-first-quarter-2016-earnings-300254914.html
SOURCE Valmont Industries, Inc.