Valmont Announces Capital Allocation Plan - Analyst Blog
May 14 2014 - 7:00PM
Zacks
Valmont Industries (VMI) announced that its
Board of Directors has adopted a capital allocation plan. The
directors listed a number of priorities for Valmont’s capital so
that they can balance between returning excess capital to
shareholders and maintaining sufficient financial capital to fund
continued growth, both organically and through acquisitions.
The Directors approved capital expenditures of about $340 million
for the period of 2014 to 2016. They stated that investment in
working capital is necessary for future sales growth. They also
approved dividends on common shares in the range of 15% of the
prior year's fully diluted net earnings.
The Directors also authorized Valmont to repurchase up to $500
million of its outstanding shares, from time to time over the next
twelve months at prevailing market prices, through open market or
privately-negotiated transactions. The buybacks will be funded from
available working capital and short-term borrowings, subject to
market and economic conditions. However, the company is not
compelled to make any purchases and may discontinue the program at
any time.
Further, the Directors approved a 50% hike in quarterly cash
dividend to 37.5 cents per share payable on Jul 15, 2014, to
shareholders of record as of Jun 27, 2014.
Valmont aims at maintaining a Moody's Corp. (MCO)
Baa2 and a Standard and Poor's BBB debt rating, with lower debt
ratings of Baa3 and BBB- being reserved for special
opportunities.
Valmont, which is among the prominent steel-pipe and tube companies
along with MRC Global Inc. (MRC) and
Mueller Water Products, Inc. (MWA), retain a Zacks
Rank #3 (Hold).
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