OMAHA, Neb., April 19, 2017 /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 2017
results.
First Quarter Highlights:
|
First
Quarter
|
Summarized
Financial Information
|
13 Weeks
Ended
|
|
1-Apr-17
|
|
26-Mar-16
|
Net sales
|
$ 637,474
|
|
$ 596,605
|
Operating
income
|
64,502
|
|
62,365
|
Operating
income as a % of net sales GAAP
|
10.1%
|
|
10.5%
|
Net
earnings
|
38,979
|
|
32,969
|
Diluted
EPS
|
$
1.72
|
|
$
1.45
|
|
|
|
|
Average Shares
Outstanding - Diluted
|
22,660
|
|
22,816
|
- Revenues increased 7% to $637.5
million
- Operating income increased largely due to improved performance
in the Utility Support Structures, Irrigation, and Energy and
Mining Segments, offset somewhat by margin compression in the
Engineered Support Structures and Coatings Segments
-
- Operating income increased $2.1
million, which included $2.8
million in higher LIFO expense related to increased raw
material costs and $1.8 million of
higher deferred compensation costs that is offset by increased
other income. Excepting these items, the increase in operating
income was $6.7 million, or 11% over
2016
- Diluted earnings per share increased 19% to $1.72
- Reaffirming annual guidance for earnings to be slightly above
$7.00 per diluted share
"Revenue increased across all segments, led by a strong
performance in Utility Support Structures Segment," said
Mogens C. Bay, Valmont's Chairman
and Chief Executive Officer. "All segments saw improved demand and
contributed to the sales growth, which supports our outlook for
revenue and earnings growth in 2017.
"As expected, rising steel and zinc costs pressured operating
margins in Engineered Support Structures and Coatings segments,
where sales price increases somewhat lagged cost increases. All
other segments had good operating performance."
First Quarter Segment Review
Infrastructure-related
Engineered Support Structures (28% of Sales)
Poles, towers and components for the global lighting, traffic and
wireless communication markets, and highway safety
products.
Sales of $180.6 million were 2%
higher than last year as a result of improved global wireless
communication product and intercompany sales.
Lighting sales declined in modestly North America, however order rates are solid.
Pricing in North America did yet
not reflect rising steel costs due to competitive market pressures.
In Europe, sales of lighting and
traffic structures declined due to lower export sales. Sales of
lighting and traffic products were comparable in the Asia-Pacific region.
Wireless communication product sales rose mainly due to
increased North American demand for poles, towers and components.
In Australia, sales increases were
driven by wireless carriers building out their networks. In
China, sales were comparable to
last year.
Operating income was $9.2 million
or 5.1% of sales compared to $12.5
million, or 7.0% of sales in 2016. Higher steel costs
compressed segment profitability.
Utility Support Structures (27% of Sales)
Steel and concrete structures for the global electric utility
industry.
Sales of $174.6 million increased
21% over last year primarily driven by higher volumes. Sales growth
is being supported by utility reliability investments in the North
American transmission grid, renewables, interconnecting regional
transmission grids, and a favorable sales mix.
Operating income increased to $22.7
million or 13.0% of sales, compared to $14.4 million or 10.0% in 2016, benefitting from
higher volume and operating leverage.
Coatings Segment (11% of Sales)
Global galvanizing, painting and anodizing services.
Sales of $73.5 million were 7%
higher than last year, mainly due to increased price to recover
higher zinc cost. Following a weak start to the year, volumes
increased as the quarter progressed. The sales mix consisted of
higher intercompany, and lower external volumes, particularly to
the solar energy and oil and gas markets.
Operating income was $9.4 million,
or 12.8% of sales, compared to $11.4
million, or 16.6% of sales in 2016. A greater mix of
intercompany volumes, which carry a lower margin and a sharp
rise in zinc costs pressured margins. Included in Q1 results
were final startup costs associated with the previously
communicated opening of a new facility in Texas.
Energy and Mining Segment (12% of Sales)
Offshore structures, engineered access systems and grinding
media.
Segment sales of $78.0 million
were 8% higher than last year with each major product line
contributing to growth. Offshore wind structures and component
sales increased, supported by continued development in Europe's North Sea region. The pipeline of
sales to non-traditional markets continues to improve, helping to
offset weak demand from the oil and gas exploration markets. Access
systems sales increased due to an improving construction market as
well as stronger commodity prices supporting mining sales in
Australia. Grinding media sales
increased as pricing rose in-line with higher input costs.
Operating income increased to $3.8
million or 4.8% of sales compared to $1.9 million, or 2.6% of sales in 2016. The
increase was driven by improved operating leverage as well as
benefits from restructuring actions taken within the Australia region in 2016.
Agriculture-related
Irrigation Segment (26% of Sales)
Agricultural irrigation equipment, parts, services and tubular
products.
Global sales of $167.2 million
were 6% above last year. North American sales were up slightly from
last year, reflecting stabilizing demand. International sales rose
broadly, led by a stronger market in Brazil. Favorable currency translation
contributed to the international sales gains.
Operating income was higher at $30.3
million, or 18.1% of sales compared to $28.9 million, or 18.2% of sales in 2016. The
quality of segment profitability remained strong despite rising raw
material costs and some competitive pricing pressure, as better
sales volumes, cost and productivity improvements offset
inflationary effects.
Outlook:
"We are off to a good start to the year," Mr. Bay said. "We are
encouraged by signs of improved demand in certain of our markets,
evidenced by our second consecutive quarter of improved sales.
While the current volatility in certain raw material costs, and
weak farm economy fundamentals, could still impact some of our
businesses, we reconfirm our sales, earnings and cash flow guidance
for the year."
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#:52418614 or via Webcast at 8:00 a.m.
CDT April 20, 2017 at
https://engage.vevent.com/rt/valmontindustries_ao~52418614.
A replay is available through the above link or by telephone
(855) 859-2056 or (404) 537-3406, Conference ID#:52418614 beginning
April 20, 2017 at 10:00 a.m. CDT through 12:00 p.m. CDT on April
27, 2017. The Company's slide presentation for the
call will be simultaneously available on the investor
relations tab at www.valmont.com under Investor Relations.
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
|
|
|
1-Apr-17
|
|
26-Mar-16
|
Net sales
|
|
$
637,473
|
|
$ 596,605
|
Cost of
sales
|
|
472,868
|
|
435,636
|
Gross profit
|
|
164,605
|
|
160,969
|
Selling, general and
administrative expenses
|
|
100,103
|
|
98,604
|
Operating income
|
|
64,502
|
|
62,365
|
Other income
(expense)
|
|
|
|
|
Interest expense
|
|
(11,304)
|
|
(11,054)
|
Interest income
|
|
928
|
|
811
|
Gain (loss) on investments
(unrealized)
|
|
1,237
|
|
(1,430)
|
Other
|
|
(39)
|
|
(248)
|
|
|
(9,178)
|
|
(11,921)
|
Earnings before income taxes and equity in
|
|
55,324
|
|
50,444
|
earnings of nonconsolidated subsidiaries
|
|
|
|
|
Income tax
expense
|
|
15,363
|
|
16,273
|
Net earnings
|
|
39,961
|
|
34,171
|
Less: Earnings
attributable to non-controlling interests
|
|
(982)
|
|
(1,202)
|
Net earnings attributable to Valmont Industries, Inc.
|
|
$
38,979
|
|
$
32,969
|
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding (000's) - Basic
|
|
22,472
|
|
22,700
|
Earnings per share -
Basic
|
|
$
1.73
|
|
$
1.45
|
|
|
|
|
|
Average shares
outstanding (000's) - Diluted
|
|
22,660
|
|
22,816
|
Earnings per share -
Diluted
|
|
$
1.72
|
|
$
1.45
|
|
|
|
|
|
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
|
|
|
1-Apr-17
|
|
26-Mar-16
|
|
|
|
|
|
Net sales
|
|
|
|
|
Engineered Support
Structures
|
|
$
180,558
|
|
$
176,971
|
Utility Support
Structures
|
|
174,612
|
|
144,520
|
Energy &
Mining
|
|
77,972
|
|
72,449
|
Coatings
|
|
73,468
|
|
68,581
|
Infrastructure products
|
|
506,610
|
|
462,521
|
|
|
|
|
|
Irrigation
|
|
167,224
|
|
158,514
|
Less: Intersegment
sales
|
|
(36,361)
|
|
(24,430)
|
Total
|
|
$
637,473
|
|
$
596,605
|
|
|
|
|
|
Operating
Income
|
|
|
|
|
Engineered Support
Structures
|
|
$
9,213
|
|
$
12,475
|
Utility Support
Structures
|
|
22,708
|
|
14,424
|
Energy and
Mining
|
|
3,837
|
|
1,902
|
Coatings
|
|
9,406
|
|
11,413
|
Infrastructure products
|
|
45,164
|
|
40,214
|
|
|
|
|
|
Irrigation
|
|
30,291
|
|
28,895
|
Adjustment to LIFO inventory
valuation method
|
|
(779)
|
|
2,027
|
Corporate
|
|
(10,174)
|
|
(8,771)
|
Total
|
|
$
64,502
|
|
$
62,365
|
|
|
|
|
|
|
|
|
|
|
|
In first quarter
of 2017, Valmont changed its reportable segment operating income to
separate out the LIFO (expense)
benefit. Prior
year information has been updated to reflect this change.
Valmont has aggregated its business segments into five reportable
segments as follows:
|
|
|
|
|
|
|
|
|
|
Engineered
Support Structures: This segment consists of the
manufacture of engineered metal, composite, and wood structures and
components for global lighting and traffic, wireless communication,
and roadway safety.
|
|
|
|
|
|
|
|
|
|
Utility
Support Structures: This segment consists of the
manufacture of engineered steel and concrete structures for the
global utility industry.
|
|
|
|
|
|
|
|
|
|
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;
|
|
|
|
|
|
|
|
|
|
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.
|
VALMONT
INDUSTRIES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
1-Apr-17
|
|
26-Mar-16
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
425,216
|
|
$
387,714
|
Accounts receivable,
net
|
|
455,044
|
|
449,379
|
Inventories
|
|
389,156
|
|
350,768
|
Prepaid expenses
|
|
54,532
|
|
46,080
|
Refundable and deferred
income taxes
|
|
7,325
|
|
18,897
|
Total current assets
|
|
1,331,273
|
|
1,252,838
|
Property, plant and
equipment, net
|
|
519,658
|
|
532,507
|
Goodwill and other
assets
|
|
615,957
|
|
614,517
|
|
|
$
2,466,888
|
|
$
2,399,862
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current installments of
long-term debt
|
|
$
860
|
|
$
1,110
|
Notes payable to
banks
|
|
957
|
|
2,402
|
Accounts payable
|
|
194,525
|
|
183,059
|
Accrued expenses
|
|
177,894
|
|
169,479
|
Dividend payable
|
|
8,468
|
|
8,527
|
Total current liabilities
|
|
382,704
|
|
364,577
|
Long-term debt,
excluding current installments
|
|
754,523
|
|
756,878
|
Other long-term
liabilities
|
|
288,381
|
|
298,256
|
Shareholders'
equity
|
|
1,041,280
|
|
980,151
|
|
|
$
2,466,888
|
|
$
2,399,862
|
|
|
|
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(unaudited) and
dollars in thousands
|
|
|
|
|
|
|
|
13 Weeks
Ended
|
|
13 Weeks
Ended
|
Cash flows from
operating activities
|
|
1-Apr-17
|
|
26-Mar-16
|
Net
Earnings
|
|
$
39,961
|
|
$
34,171
|
Depreciation and amortization
|
|
20,827
|
|
20,598
|
Change
in restricted cash - pension plan
|
|
12,568
|
|
-
|
Contribution to defined benefit pension plan
|
|
(25,379)
|
|
-
|
Change
in working capital
|
|
(28,675)
|
|
16,427
|
Other
|
|
16,681
|
|
9,331
|
Net cash
flows from operating activities
|
|
$
35,983
|
|
80,527
|
|
|
|
|
|
Cash flows from
investing activities
|
|
|
|
|
Purchase
of property, plant, and equipment
|
|
$
(14,168)
|
|
$
(13,961)
|
Other
|
|
(1,413)
|
|
(2,180)
|
Net cash
flows from investing activities
|
|
$
(15,581)
|
|
$
(16,141)
|
|
|
|
|
|
Cash flows from
financing activities
|
|
|
|
|
Net
borrowings on short and long-term agreements
|
|
$
38
|
|
$
(220)
|
Purchase
of treasury shares
|
|
-
|
|
(16,939)
|
Dividends paid
|
|
(8,445)
|
|
(8,571)
|
Other
|
|
5,547
|
|
2,356
|
Net cash
flows from financing activities
|
|
$
(2,860)
|
|
$
(23,374)
|
Effect of exchange
rates on cash and cash equivalents
|
|
7,726
|
|
(2,372)
|
Net change in cash
and cash equivalents
|
|
25,268
|
|
38,640
|
Cash and cash
equivalents - beginning of year
|
|
399,948
|
|
349,074
|
Cash and cash
equivalents - end of period
|
|
$
425,216
|
|
$
387,714
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/valmont-reports-first-quarter-2017-results-300442250.html
SOURCE Valmont Industries, Inc.