Second Quarter Highlights: - Record second quarter sales, operating
income and net earnings. - Operating income increased 9.5% to 13.9%
of net sales. - Net earnings increased 18.7%. - Second quarter
utility sales nearly doubled and operating income reached 23.8% of
segment sales. - Second quarter irrigation sales decreased 37% and
operating income fell 65%. - Inventories were reduced by $65.5
million and Total debt declined $68.5 million during the quarter.
OMAHA, Neb., July 21 /PRNewswire-FirstCall/ -- Valmont Industries,
Inc. (NYSE:VMI), a leading global manufacturer of engineered
support structures for infrastructure, mechanized irrigation
equipment for agriculture, and a provider of coating services,
reported second quarter sales of $498.8 million compared with
$497.1 million for the same period of 2008. Net earnings for the
second quarter were $44.2 million, or $1.69 per diluted share,
versus second quarter 2008 net earnings of $37.3 million, or $1.41
per diluted share. For the first six months of 2009, sales were
$954.0 million versus $919.4 million in 2008. Valmont's first half
net earnings were $80.1 million, or $3.05 per diluted share,
compared with 2008 first half net earnings of $67.0 million, or
$2.55 per diluted share. Second Quarter Summary: "Substantially
stronger Utility Segment sales offset lower sales in all other
segments," said Mogens C. Bay, Valmont's Chairman and Chief
Executive Officer. "Irrigation Segment sales were particularly weak
compared to last year, as farmers curtailed spending in reaction to
lower crop prices and a weak global economy. "In our Engineered
Support Structures Segment, sales were somewhat lower than last
year. Economic weakness and tight budgets have reduced
infrastructure spending in most of our markets. The impact of
acquisitions completed in 2008 helped to mitigate the extent of the
sales decline. "Coatings Segment sales declined reflecting weakness
in the industrial economy. "In total, profitability increased over
last year's second quarter largely due to the strong earnings
contribution from the Utility Support Structures Segment. As a
result, consolidated operating income improved 1.2 percentage
points to 13.9% of revenues. "We generated strong operating cash
flows during the quarter, which we used primarily to pay down debt
and strengthen our financial condition." Second Quarter Segment
Review: Utility Support Structures Segment (40% of 2nd Quarter Net
Sales) Steel and concrete structures for the North American
electric utility industry. Sales nearly doubled to $199.2 million
compared with $101.3 million in 2008. The increase in sales
reflects higher volumes and shipments of some very large projects
during the second quarter. There are two main factors driving the
demand for utility structures in North America. One is the need to
add transmission capacity to the electrical grid to carry
additional electricity. The second is to improve the grid's
reliability to lower the risk of service interruption. Valmont
believes that these two trends should continue to drive long term
performance for its Utility Support Structures Segment. While the
long term demand trends are strong, the Company anticipates the
sales growth comparison to moderate in the second half of the year,
due to the reduction in backlog that has occurred so far this year.
Due to better fixed cost leverage on increased volumes and falling
material prices, operating income grew to $47.5 million and was
23.8% of sales. Engineered Support Structures Segment (33% of 2nd
Quarter Net Sales) Structures and specialty structures for lighting
and traffic, wireless communication and overhead signs, worldwide.
Includes utility structures outside of North America. Second
quarter sales were 4% lower at $182.5 million compared to $191.0
million in 2008. Public spending on lighting and traffic
infrastructure in most global economies fell as government entities
faced declining tax receipts and tight budgets. In Europe, sales
were particularly soft in France and Eastern Europe due to economic
weakness. Strength in other markets and the impact of acquisitions
completed during 2008 helped to mitigate the extent of the sales
decline in Europe. Commercial lighting demand fell in North America
due to weakness in residential and commercial construction markets
as a result of the economic recession that started in the second
half of 2008. Specialty structures sales were higher in North
America, largely due to the impact of an acquisition. In the
Chinese market, specialty structures sales were flat and utility
product sales were lower. Globally, several government stimulus
plans promoting infrastructure development have been announced.
Valmont believes this spending takes time to translate into orders
for the Company. Consequently, we do not expect to see a
significant impact from stimulus programs in 2009. Over the long
term however, we believe the company is well positioned to benefit
from increased global infrastructure spending programs. Operating
income declined 22% to $14.1 million or 7.7% of segment sales. The
decline in operating income was primarily due to the impact of
lower volumes on fixed factory expenses offset somewhat by the
impact of acquisitions. Margins were also lower due to competitive
pricing pressure. Irrigation Segment (20% of 2nd Quarter Net Sales)
Center pivot and linear move mechanized irrigation equipment and
parts for agriculture in global markets. Sales fell 37% to $101.1
million compared with $159.7 million in 2008. Global demand for
irrigation equipment was substantially lower than last year's
record levels. We believe customers curtailed investment in
irrigation equipment in response to a weak global economy and the
expectation of lower farm income in 2009. Operating income declined
65% to $9.8 million due to lower sales and the associated volume
de-leverage of fixed operating costs. While the current economic
environment has negatively influenced irrigation customer
purchases, we believe the long-term prospects for growth are
compelling. Population growth will require increased food
production. Increased food production will require better farm
productivity, especially as it relates to the use of water.
Competing demands for water will draw attention to the need to use
less water for agriculture. These factors should drive greater
adoption of mechanized irrigation equipment that improves farm
productivity and uses less water for large scale agriculture. As a
result, we believe Valmont is well positioned to benefit from its
global leadership position in the market for irrigation equipment
when conditions improve. Coatings Segment (4% of 2nd Quarter Net
Sales) Hot-dip galvanizing, anodizing and powder coatings to
protect against corrosion of steel and aluminum in North American
markets. Sales of $28.6 million were 23% below last year's $37.2
million. The sales decrease reflects weakness in the industrial
sector. Additionally, customer pricing was reduced to reflect lower
zinc costs. Operating income declined 30% to $6.4 million and was
22.4% of segment sales. The decrease in operating income resulted
from lower production volumes. 2009 Outlook: "Our outlook for 2009
has improved," Mr. Bay said. "Although we expect sales comparisons
to be lower in the second half of the year, we now expect net
earnings for the year to be modestly higher than 2008's record
earnings. "Our sales outlook in the second half of the year is
based on several factors. Current raw material costs are down from
last year, which could impact comparisons in some businesses. In
the North American utility market, we expect the sales gain in the
second half to moderate as a number of large orders have shipped.
In the Engineered Support Structures Segment, while we do not
expect major changes in market conditions, we have recently seen an
improvement in our export markets from Europe and China; as a
result second half sales could show positive comparisons. For the
North American business, an important long-term driver would be an
extension or renewal of the U.S. Federal Highway bill. In the
Coatings Segment, we expect sales declines, reflecting weakness in
the industrial economy and lower zinc prices. In the Irrigation
Segment, third quarter comparisons will be substantially
unfavorable compared to last year's record third quarter results.
Fourth quarter results will be determined by the conditions in the
agricultural sector following the fall harvest in North America and
the resultant outlook for farm income. "We have leadership
positions in very attractive markets. When economic conditions
improve, we should be well positioned to participate in global
infrastructure and agriculture growth. Our industry, product lines
and geographic diversification have allowed us to deliver record
earnings during the current global economic recession. We will
continue to be prudent in our management of capital and maintain a
conservative financial profile." An audio discussion of Valmont's
first quarter results by Mogens C. Bay, Chairman and Chief
Executive Officer and Terry J. McClain, Senior Vice President and
Chief Financial Officer, will be available live by telephone by
dialing 1-877-493-2981 and entering Conference ID#: 82131530 or via
the Internet at 8:00 a.m. July 22, 2009 CDT, 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 1-800-642-1687 or 706-645-9291, and enter the Conference ID#:
82131530 beginning July 22, 2009 at 9:30 a.m. EDT through 12:00
a.m. EDT on July 29, 2009. Valmont is the global leader in
designing and manufacturing poles, towers and structures for
lighting and traffic, wireless communication and utility markets,
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 OPERATIONS (Dollars in thousands, except
per share amounts) (unaudited) Second Quarter Year-to-Date 13 Weeks
Ended 26 Weeks Ended -------------- -------------- 27-Jun-09
28-Jun-08 27-Jun-09 28-Jun-08 --------- --------- ---------
--------- Net sales $498,810 $497,129 $953,964 $919,415 Cost of
sales 354,129 359,926 680,967 666,404 ------- ------- -------
------- Gross profit 144,681 137,203 272,997 253,011 Selling,
general and administrative expenses 75,265 73,833 145,262 139,175
------ ------ ------- ------- Operating income 69,416 63,370
127,735 113,836 ------ ------ ------- ------- Other income
(expense) Interest expense (3,976) (4,708) (8,260) (9,182) Interest
income 284 877 616 1,498 Miscellaneous 1,608 (515) (190) (1,858)
----- ---- ---- ------ (2,084) (4,346) (7,834) (9,542) ------
------ ------ ------ Earnings before income taxes, minority
interest, and equity in earnings (losses) of nonconsolidated
subsidiaries 67,332 59,024 119,901 104,294 Income tax expense
22,051 20,548 39,306 35,602 ------ ------ ------ ------ Earnings
before minority interest, equity in earnings (losses) of
nonconsolidated subsidiaries 45,281 38,476 80,595 68,692 Earnings
(losses) in nonconsolidated subsidiaries (71) 31 495 (43) --- --
--- --- Net earnings 45,210 38,507 81,090 68,649 ------ ------
------ ------ Earnings attributable to the non-controlling interest
(980) (1,243) (996) (1,686) ---- ------ ---- ------ Net earnings
attributable to Valmont Industries, Inc. $44,230 $37,264 $80,094
$66,963 ======= ======= ======= ======= Average shares outstanding
(000's) - Basic 25,943 25,823 25,928 25,763 ====== ====== ======
====== Earnings per share - Basic $1.70 $1.44 $3.09 $2.60 =====
===== ===== ===== Average shares outstanding (000's) - Diluted
26,223 26,377 26,224 26,306 ====== ====== ====== ====== Earnings
per share - Diluted $1.69 $1.41 $3.05 $2.55 ===== ===== ===== =====
Cash dividends per share $0.150 $0.130 $0.280 $0.235 ====== ======
====== ====== VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY
OPERATING RESULTS (Dollars in thousands) (unaudited) Second Quarter
Year-to-Date 13 Weeks Ended 26 Weeks Ended --------------
-------------- 27-Jun-09 28-Jun-08 27-Jun-09 28-Jun-08 ---------
--------- --------- --------- Net sales Engineered Support
Structures $182,542 $190,959 $340,929 $340,397 Utility Support
Structures 199,145 101,302 375,206 202,472 Coatings 28,600 37,200
58,612 72,328 ------ ------ ------ ------ Infrastructure products
410,287 329,461 774,747 615,197 Irrigation 101,047 159,667 204,109
290,445 Other 17,693 30,802 37,303 56,251 Less: Intersegment sales
(30,217) (22,801) (62,195) (42,478) ------- ------- ------- -------
Total $498,810 $497,129 $953,964 $919,415 ======== ========
======== ======== Operating Income Engineered Support Structures
$14,046 $18,073 $22,115 $28,155 Utility Support Structures 47,469
13,732 86,425 28,405 Coatings 6,393 9,085 12,384 15,631 ----- -----
------ ------ Infrastructure products 67,908 40,890 120,924 72,191
Irrigation 9,834 28,019 21,846 50,414 Other 3,401 5,288 6,875 9,700
Corporate (11,727) (10,827) (21,910) (18,469) ------- -------
------- ------- Total $69,416 $63,370 $127,735 $113,836 =======
======= ======== ======== Valmont has aggregated its business
segments into four reportable segments as follows. Engineered
Support Structures: This segment consists of the manufacture of
engineered metal structures and components for the lighting,
traffic and wireless communication industries worldwide,
international utility markets, and for other specialty
applications. Utility Support Structures: This segment consists of
the manufacture of engineered steel and concrete structures
primarily for the North American utility industry. Coatings: This
segment consists of galvanizing and other coating services.
Irrigation: This segment consists of the manufacture of
agricultural irrigation equipment and related parts and services.
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 tubular products and distribution of industrial
fasteners, are reported in the "Other" category. VALMONT
INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (Dollars in thousands) (unaudited) 27-Jun-09 28-Jun-08
--------- --------- ASSETS ------ Current assets: Cash and cash
equivalents $96,262 $64,835 Accounts receivable, net 336,168
306,887 Inventories 251,621 250,247 Prepaid expenses 24,824 25,764
Refundable and deferred income taxes 28,444 28,240 ------ ------
Total current assets 737,319 675,973 Property, plant and equipment,
net 277,886 259,384 Goodwill and other assets 304,236 270,735
------- ------- $1,319,441 $1,206,092 ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------ Current liabilities: Current
installments of long-term debt $1,043 $61,820 Notes payable to
banks 17,634 20,588 Accounts payable 129,662 158,522 Accrued
expenses 107,359 110,530 Dividend payable 3,940 3,397 ----- -----
Total current liabilities 259,638 354,857 Long-term debt, excluding
current installments 258,418 181,409 Other long-term liabilities
69,741 79,158 Shareholders' equity 731,644 590,668 ------- -------
$1,319,441 $1,206,092 ========== ========== DATASOURCE: Valmont
Industries, Inc. CONTACT: Jeff Laudin of Valmont Industries, Inc.,
+1-402-963-1158, fax, +1-402-963-1198 Web Site:
http://www.valmont.com/
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