OMAHA, Neb., July 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 second quarter 2017 results.
Second Quarter Highlights:
Year to date
Summarized Financial Information
13 Weeks Ended
26 Weeks Ended
Operating income as a % of net sales
Average Shares Outstanding - Diluted
"Substantial increases in Utility Support Structures and Irrigation Segment sales drove second quarter performance," said Mogens C. Bay, Valmont's Chairman and Chief Executive Officer. "Engineered Support Structures and Coatings Segment sales also improved, while Energy and Mining sales declined due to weaker end market demand. Overall, a less favorable sales mix and some lagging recoveries of increased raw material costs resulted in slightly lower operating income as a percent of sales."
Second Quarter Segment Review
Engineered Support Structures (29% of Sales) Poles, towers and components for the global lighting, traffic and wireless communication markets, and highway safety products.
Sales of $217.6 million were 7% higher than last year, mainly due to increased intersegment sales to the Utility Support Structures Segment and improved wireless communication product sales in North America.
Lighting sales decreased slightly in North America and Europe, partly offset by higher sales in the Asia-Pacific region.
Operating income was $20.2 million or 9.3% of sales compared to $20.8 million, or 10.2% of sales in 2016. The effect of higher steel costs and higher intersegment sales resulted in margin compression.
Utility Support Structures (25% of Sales)Steel and concrete structures for the global electric utility industry.
Sales of $184.6 million increased 22% over last year, driven by a combination of volume increases and some pricing tied to higher steel costs. Sales growth remains supported by the ongoing expansion of the North American grid to improve its reliability and capacity. New investments in renewable energy generation also contribute to the need for transmission structures.
Operating income increased to $20.2 million or 10.9% of sales, compared to $17.6 million or 11.6% in 2016. The increase in operating income was due to higher sales. Operating income as a percent of sales declined due to a less favorable product line mix.
Coatings Segment (11% of Sales)Global galvanizing, painting and anodizing services.
Sales of $79.8 million were 6% higher than last year, mostly due to increased activity in the Asia-Pacific region. North American sales improved, benefitting from the new facility in Texas and increased internal volumes to other segments, which partially offset lower external demand.
Operating income was $12.1 million, or 15.2% of sales, compared to $14.0 million, or 18.6% of sales in 2016. The decrease in operating income resulted from the effect of lower external volumes, and zinc cost increases not fully recovered in sales by pricing, this was partly offset by improved profitability in the Asia-Pacific region.
Energy and Mining Segment (10% of Sales) Offshore structures, engineered access systems and grinding media.
Sales of $77.2 million were 4% lower than last year mostly due to lower sales of access systems. Expansion into markets outside of mining and energy helped mitigate the impact of reduced demand from markets exposed to oil and gas, which weakened during the quarter.
Operating income at $3.9 million was 18% higher at 5.1% of sales, compared to $3.3 million or 4.1% of sales last year.
Irrigation Segment (25% of Sales)Agricultural irrigation equipment, parts, services and tubular products.
Sales of $188.3 million rose 24% above last year, with significant increases in both North America and International regions. North American sales increased due to improved demand from markets outside the traditional corn-belt. Additionally, higher equipment operating times drove increased service parts sales. The broad increase in International sales was led by project demand and continued favorable market conditions in Brazil.
Operating income was higher at $34.7 million, or 18.4% of sales compared to $31.0 million, or 20.4% of sales in 2016. The decline in operating income as a percent of sales was due to higher raw material costs only partly offset by leverage of volume, and selling, general and administrative expenses.
"We are reaffirming our annual guidance for earnings to be slightly above $7.00 per diluted share," said Mr. Bay.
"The Utility market has developed stronger than our earlier expectations and we anticipate good demand for the rest of the year. In Engineered Support Structures, we believe moderating steel costs along with price recovery reinforces expectations for second half improvement. In Coatings, we expect stable demand supported by internal and industrial demand. Our Energy and Mining Segment is challenged by difficult end-market demand, and we expect lower second half comparisons. In Irrigation, our international presence developed over many years will be an important contributor to second-half Irrigation results. For North America, we expect the normal third quarter seasonality, with the fourth quarter dependent on crop prices and farmer sentiment upon completion of the growing season."
An audio discussion of Valmont's second quarter results will be available live by
Telephone by dialing 1-877-493-2981 and entering Conference ID#:52421279 or via Webcast at 8:00 a.m. CDT July 20, 2017 at https://engage.vevent.com/rt/valmontindustries_ao~52421279. A replay is available through the above link or by telephone (855) 859-2056 or (404) 537-3406, Conference ID#:52421279 beginning July 20, 2017 at 10:00 a.m. CDT through 12:00 p.m. CDT on July 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)
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
Utility Support Structures
Energy and Mining
Less: Intersegment sales
Adjustment to LIFO inventory valuation method
Valmont has aggregated its business segments into five global reportable segments as follows.
Engineered Support Structures: This segment consists of the manufacture of engineered structures and components for lighting and traffic, wireless communication, and roadway safety industries.
Utility Support Structures: This segment consists of the manufacture of engineered steel and concrete structures for the utility industry.
Energy and Mining: This segment includes the manufacture of access systems applications, forged steel grinding media, and offshore oil, gas and wind energy structures;
Coatings: This segment consists of galvanizing, painting and anodizing services.
Irrigation: This segment consists of the manufacture of agricultural irrigation equipment and related parts and services for agricultural industry and 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
(Dollars in thousands) and unaudited
Cash flows from operating activities
Depreciation and amortization
Change in restricted cash - pension plan
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
Net borrowings on short and long-term agreements
Purchase of treasury shares
Purchase of noncontrolling interest
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
SOURCE Valmont Industries, Inc.