Third Quarter Highlights: - Net earnings increased 9.4% to a record
third quarter level of $40.5 million. - Operating income increased
1.4% on a 12% decrease in sales. - Operating income was 14.5% of
net sales, an improvement of two percentage points. - Utility
Support Structures sales increased 33% and operating income
increased 170%. - Third quarter irrigation sales decreased 50% and
operating income fell 78%. OMAHA, Neb., Oct. 15
/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 third quarter sales of
$434.0 million compared with $494.8 million for the same period of
2008. Net earnings for the third quarter were $40.5 million, or
$1.53 per diluted share, versus third quarter 2008 net earnings of
$37.0 million, or $1.40 per diluted share. For the first nine
months of 2009, sales were $1,388.0 million versus $1,414.2 million
in 2008. Valmont's nine-month net earnings were $120.6 million, or
$4.59 per diluted share, compared with 2008 nine-month net earnings
of $103.9 million, or $3.95 per diluted share. Third Quarter
Summary: "Outstanding results in the Utility Support Structures
Segment along with a slight improvement in the Engineered Support
Structures Segment more than offset significant sales and earnings
declines in our other segments," said Mogens C. Bay, Valmont's
Chairman and Chief Executive Officer. "Profitability in the Utility
Support Structures Segment was exceptionally strong due to
excellent factory fixed cost and SG&A expense leverage and the
benefit of falling steel costs. "In the Irrigation Segment, results
were significantly lower in sharp contrast to 2008's record third
quarter results. Lower crop prices and the outlook for a decline in
global farm income in 2009 deterred farmers from purchasing
irrigation equipment. "In our Engineered Support Structures
Segment, sales were slightly higher, largely due to the
contribution of acquisitions made after last year's third quarter.
Sales and earnings improved in international markets, while North
American markets faced continued weakness in commercial lighting
and lower sales in wireless communication products. "Coatings
Segment revenues were lower due to a general decline in
manufacturing activity as a result of the U.S. economic recession.
"In total, consolidated operating income improved 1.4% and was
14.5% of sales, mostly due to the strong earnings contribution from
the Utility Support Structures Segment." Third Quarter Segment
Review: Utility Support Structures Segment (35% of 3rd Quarter Net
Sales) Steel and concrete structures for the North American
electric utility industry. Sales increased 33.4% to $150.7 million
compared with $113.0 million in 2008. The increase in sales
reflects higher volumes and shipments to fulfill project orders
that were in backlog. Driving the demand for Valmont's utility
structures is the need to increase the capacity of the electrical
transmission grid following a period of under-investment. There is
also a drive to improve the grid's reliability in order to lower
the risk of service interruption. Increasing investment in wind and
solar farms also adds to the demand for transmission structures.
Valmont expects these trends to continue to support long-term sales
growth in the Utility Support Structures Segment. Near-term
however, some utilities are deferring projects in response to the
economic recession. Therefore, we believe that in the short-term,
sales will decline in this segment. Operating income improved to
$40.4 million and was 26.8% of sales due to better fixed operating
cost leverage on increased volumes. Declines in material costs,
particularly steel, also contributed to the increase in operating
income. Engineered Support Structures Segment (40% of 3rd Quarter
Net Sales) Structures and specialty structures for lighting and
traffic, wireless communication and overhead signs, worldwide.
Includes utility structures outside of North America. Third quarter
sales were 1.8% higher at $190.4 million. In North America,
commercial lighting demand fell due to weakness in residential and
commercial construction markets as a result of the current economic
recession. In Europe, results were also impacted by the global
recession, however third quarter sales improved due to an increase
in project activity for export. Acquisitions completed after the
third quarter last year contributed to the higher sales in Europe.
Specialty structures sales fell in North America, due to lower
levels of activity among wireless carriers. In the Chinese market,
specialty structures sales were essentially flat and utility
product sales were lower. Historically, the U.S. Highway bill has
been a strong driver of demand for Valmont's lighting and traffic
structures. The 2005 highway bill was recently extended for a short
period of time and a new highway bill is not expected soon. Until a
new multi-year highway bill is passed, we will not have good
visibility in this business. Operating income improved 12% to $18.2
million or 9.6% of segment sales. The increase in operating income
resulted from improved results in international markets,
operational improvements and the impact of acquisitions. Irrigation
Segment (17% of 3rd Quarter Net Sales) Center pivot and linear move
mechanized irrigation equipment and parts for agriculture in global
markets. Sales fell 50% to $75.2 million compared with $150.4
million in 2008. We believe the substantial decline in sales was
the result of farmer's expectations for lower crop prices and
income in 2009. This year's results stand in sharp contrast to the
record third quarter 2008 results. Last year global coarse grain
demand was strong and commodity prices were higher. Irrigation
Segment results this year also reflect a more normal seasonal
pattern than last year's third quarter. Operating income declined
78% to $5.6 million due to lower sales and the associated volume
de-leverage of fixed operating costs. Despite slower demand for
irrigation equipment this year, we believe nothing has changed in
the long-term outlook. A growing world population should continue
to put increased pressure on farmers to increase productivity and
use less water. We believe Valmont with its leadership position in
the industry is well positioned to benefit from improved demand
when conditions improve. Coatings Segment (5% of 3rd Quarter Net
Sales) Hot-dip galvanizing, anodizing and powder coatings to
protect against corrosion of steel and aluminum in North American
markets. Sales of $29.7 million were 17.3% below last year. The
sales decrease reflects the U.S. economic recession and weaker
demand from industrial fabricators. Operating income declined 18%
to $7.6 million. Despite lower production volumes, the quality of
earnings was maintained with operating income at 25.6% of segment
sales. Fourth Quarter Outlook: "Our outlook for the fourth quarter
is for lower sales with earnings similar to last year's levels,"
Mr. Bay said. "The backlog in the utility business is significantly
below last year's levels. Additionally, the continued global
economic recession and the lack of a multi-year U.S. highway bill
constrain growth in our Engineered Support Structures and Coatings
Segments. "In the Irrigation Segment, fourth quarter results will
still be driven by the weak outlook for lower farm income and crop
prices. "We believe our market leadership positions and industry,
product line and geographic diversification leave us well
positioned for strong performance when the global economic
recession abates. We participate in attractive markets with solid
long-term growth drivers. Our global infrastructure businesses
support roadway development and electrification necessary for
economic growth. In the agricultural markets, our irrigation
equipment helps improve grower productivity and save fresh water
resources. We will continue to be prudent in our management of
capital and maintain a conservative financial profile." An audio
discussion of Valmont's third 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#:
82132649 or via the Internet at 8:00 a.m. October 16, 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#:
82132649 beginning October 16, 2009 at 10:30 a.m. CDT through 12:00
p.m. CDT on October 23, 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) Third Quarter Year-to-Date 13 Weeks
Ended 39 Weeks Ended -------------- -------------- 26-Sep-09
27-Sep-08 26-Sep-09 27-Sep-08 --------- --------- ---------
--------- Net sales $434,010 $494,801 $1,387,974 $1,414,216 Cost of
sales 297,652 359,802 978,619 1,026,206 ------- ------- -------
--------- Gross profit 136,358 134,999 409,355 388,010 Selling,
general and administrative expenses 73,625 73,103 218,887 212,278
------ ------ ------- ------- Operating income 62,733 61,896
190,468 175,732 ------ ------ ------- ------- Other income
(expense) Interest expense (3,587) (4,264) (11,847) (13,446)
Interest income 370 382 986 1,880 Miscellaneous 2,106 (376) 1,916
(2,234) ----- ---- ----- ------ (1,111) (4,258) (8,945) (13,800)
------ ------ ------ ------- Earnings before income taxes, minority
interest, and equity in earnings of nonconsolidated subsidiaries
61,622 57,638 181,523 161,932 Income tax expense 20,338 19,588
59,644 55,190 ------ ------ ------ ------ Earnings before minority
interest, equity in earnings of nonconsolidated subsidiaries 41,284
38,050 121,879 106,742 Earnings in nonconsolidated subsidiaries 84
412 579 369 -- --- --- --- Net earnings 41,368 38,462 122,458
107,111 ------ ------ ------- ------- Earnings attributable to the
non-controlling interest (894) (1,478) (1,890) (3,164) ---- ------
----- ------ Net earnings attributable to Valmont Industries, Inc.
$40,474 $36,984 $120,568 $103,947 ======= ======= ======== ========
Average shares outstanding (000's) - Basic 25,963 25,864 25,936
25,793 ====== ====== ====== ====== Earnings per share - Basic $1.56
$1.43 $4.65 $4.03 ===== ===== ===== ===== Average shares
outstanding (000's) - Diluted 26,402 26,362 26,257 26,321 ======
====== ====== ====== Earnings per share - Diluted $1.53 $1.40 $4.59
$3.95 ===== ===== ===== ===== Cash dividends per share $0.150
$0.130 $0.430 $0.365 ====== ====== ====== ====== VALMONT
INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OPERATING RESULTS
(Dollars in thousands) (unaudited) Third Quarter Year-to-Date 13
Weeks Ended 39 Weeks Ended -------------- -------------- 26-Sep-09
27-Sep-08 26-Sep-09 27-Sep-08 --------- --------- ---------
--------- Net sales Engineered Support Structures $190,398 $187,069
$531,327 $527,466 Utility Support Structures 150,719 112,986
525,925 315,458 Coatings 29,683 35,889 88,295 108,217 ------ ------
------ ------- Infrastructure products 370,800 335,944 1,145,547
951,141 Irrigation 75,230 150,445 279,339 440,890 Other 16,944
33,564 54,247 89,815 Less: Intersegment sales (28,964) (25,152)
(91,159) (67,630) ------- ------- ------- ------- Total $434,010
$494,801 $1,387,974 $1,414,216 ======== ======== ==========
========== Operating Income Engineered Support Structures $18,193
$16,247 $40,308 $44,402 Utility Support Structures 40,372 14,620
126,797 43,025 Coatings 7,581 9,284 19,965 24,915 ----- -----
------ ------ Infrastructure products 66,146 40,151 187,070 112,342
Irrigation 5,633 25,249 27,479 75,663 Other 3,046 5,821 9,921
15,521 Corporate (12,085) (9,325) (33,995) (27,794) ------- ------
------- ------- Total $62,740 $61,896 $190,475 $175,732 =======
======= ======== ======== 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) 26-Sep-09 27-Sep-08
--------- --------- ASSETS ------ Current assets: Cash and cash
equivalents $129,844 $68,095 Accounts receivable, net 296,267
318,723 Inventories 216,483 313,600 Prepaid expenses 26,596 19,612
Refundable and deferred income taxes 31,894 32,223 ------ ------
Total current assets 701,084 752,253 Property, plant and equipment,
net 286,666 265,210 Goodwill and other assets 300,961 285,430
------- ------- $1,288,711 $1,302,893 ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------ Current liabilities: Current
installments of long-term debt $977 $2,341 Notes payable to banks
24,950 28,234 Accounts payable 118,463 177,102 Accrued expenses
120,866 130,499 Dividend payable 3,941 3,399 ----- ----- Total
current liabilities 269,197 341,575 Long-term debt, excluding
current installments 171,710 265,086 Other long-term liabilities
69,882 62,026 Shareholders' equity 777,922 634,206 ------- -------
$1,288,711 $1,302,893 ========== ========== 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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