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.
"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."
Summarized Financial Info.
13 Weeks Ended
Operating income as a % of net sales
Net earnings - GAAP
Net earnings - Adjusted *
Diluted EPS - GAAP net earnings
Average Shares Oustanding - Diluted
Diluted EPS - Adjusted net earnings *
* Please see Reg. G reconciliation table on last page.
First Quarter Segment Review
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.
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.
"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)
Cost of sales
Selling, general and administrative expenses
Other income (expense):
Earnings before income taxes and equity in
earnings of nonconsolidated subsidiaries
Income tax expense
Less: Earnings attributable to non-controlling interests
Net earnings attributable to Valmont Industries, Inc.
Average shares outstanding (000's) - Basic
Earnings per share - Basic
Average shares outstanding (000's) - Diluted
Earnings per share - Diluted
Cash dividends per share
SUMMARY OPERATING RESULTS
(Dollars in thousands)
Engineered Support Structures
Energy & Mining
Utility Support Structures
Less: Intersegment sales
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.
CONDENSED CONSOLIDATED BALANCE SHEETS
Cash and cash equivalents
Accounts receivable, net
Refundable and deferred income taxes
Total current assets
Property, plant and equipment, net
Goodwill and other assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Current installments of long-term debt
Notes payable to banks
Total current liabilities
Long-term debt, excluding current installments
Other long-term liabilities
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) and dollars in thousands
Cash flows from operating activities
Depreciation and amortization
Contribution to defined benefit pension plan
Change in working capital
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant, and equipment
Net cash flows from investing activities
Cash flows from financing activities
Principal payments on long-term borrowings
Purchase of treasury shares
Net cash flows from financing activities
Effect of exchange rates on cash and cash equivalents
Net change in cash and cash equivalents
Cash and cash equivalents - beginning of year
Cash and cash equivalents - end of period
SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS
REGULATION G RECONCILIATION
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 endedMarch 26,2016
Quarter endedMarch 28,2015
Net earnings attributable to Valmont Industries, Inc. - as reported
Fair market value adjustment, Delta EMD - after-tax
Restructuring Expense (pre-tax $785 in 2015)
Net earnings attributable to Valmont Industries, Inc. - Adjusted
SOURCE Valmont Industries, Inc.