OMAHA, Neb., Oct. 18, 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 third quarter 2017 results.
Third Quarter Highlights:
Summarized Financial Info.
13 Weeks Ended
39 Weeks Ended
Operating income as a % of net sales GAAP
Operating income Adjusted*
Operating income as a % of net sales Adjusted*
Net earnings - GAAP
Net earnings - Adjusted *
Diluted EPS - GAAP net earnings
Average Shares Outstanding - Diluted
Diluted EPS - Adjusted net earnings *
* Please see Reg. G reconciliation table on last page.
"All segments had sales growth except Energy and Mining, with double digit sales growth in the Utility Support Structures, Irrigation and Coatings segments," said Mogens C. Bay, Valmont's Chairman and Chief Executive Officer. "The impact of hurricanes in North America during the third quarter were disruptive to customers, and affected 10 of our facilities, interrupting production and delivery schedules. We estimate that movements of delivery dates and manufacturing downtime negatively impacted EPS by approximately 10 cents.
"Operating income grew largely due to the sales increase, led by improved profitability in the Utility Support Structures, Irrigation and Coatings Segments. In the Engineered Support Structures and Energy and Mining Segments, operating income was negatively impacted by raw material inflation.
"Excluding the disruptive impact of the two hurricanes, results for the quarter met our expectations."
Third Quarter Segment Review
Engineered Support Structures (31% of Sales)Poles, towers and components for the global lighting, traffic and wireless communication markets, and highway safety products.
Sales of $221.5 million were 9% higher than last year, mainly due to increased highway safety sales in Australia where road development activity increased.
Lighting sales were lower in North America. We believe customers are awaiting clarity on national infrastructure investment policies before embarking on major project planning. In Europe, lighting sales increased as general market conditions stabilized.
Wireless communication sales increased due to improved structures and components demand in North America. In China, wireless communication sales were comparable with last year as China continues to build out its wireless network infrastructure.
Operating income was $16.2 million or 7.3% of sales compared to $20.3 million, or 10.0% of sales in 2016. The effect of sharply higher steel costs in China, a higher mix of intercompany sales and continued competitive pricing compressed margins.
Utility Support Structures (25% of Sales)Steel and concrete structures for the global electric utility industry.
Sales of $179.8 million increased 19% over last year, mostly driven by increased pricing to reflect higher steel costs. Sales were supported by the ongoing expansion of the North American grid to improve its reliability and capacity. Expanding investments in renewable energy contributed to continued firm demand.
Operating income increased to $22.1 million or 12.3% of sales, compared to $16.2 million or 10.8% in 2016. The increase in operating income was primarily due to price recovery and favorable mix.
Coatings Segment (12% of Sales)Global galvanizing, painting and anodizing services.
Sales of $82.6 million were 18% higher than last year. In North America, increased pricing and stronger internal demand drove higher sales. Asia-Pacific sales rose due to improved volume and pricing as the market recovered.
Despite zinc cost increases, operating income improved to $14.6 million, or 17.6% of sales, compared to $11.7 million, or 16.7% of sales in 2016. The operating income improvement resulted from increased volume, price recovery and operational efficiencies realized from prior restructuring activities.
Energy and Mining Segment (11% of Sales)Offshore structures, engineered access systems and grinding media.
Sales of $79.8 million were slightly lower than last year. Higher access system sales partly offset declines in mining consumables and offshore construction.
Operating income at $1.4 million was significantly lower at 1.8% of sales, compared to $3.9 million or 4.8% of sales last year. Most of the reduced profitability resulted from a considerably less favorable steel cost environment in mining consumables.
Australian regulatory approval is pending on the divestiture of the mining consumables business (previously announced on August 24, 2017).
Irrigation Segment (21% of Sales)Agricultural irrigation equipment, parts, services and tubular products.
Sales of $147.4 million rose 15% above last year due to broad based demand in international markets. North American sales were modestly higher.
Operating income was higher at $18.2 million, or 12.3% of sales compared to $15.3 million, or 12.0% of sales in 2016. The increase in operating income was mostly due to higher international irrigation sales. Additionally, improved operational performance more than offset the impact of materials inflation.
"We are updating our guidance to account for the impact of the two hurricanes. We expect earnings for the year to be in the range of $6.90 to 7.04 per diluted share," said Mr. Bay.
"We expect higher fourth quarter revenues, led by favorable Utility Support and Engineered Support Structures sales. In Coatings, we expect similar revenues to last year. We expect unfavorable sales and profitability comparisons in the Energy and Mining Segment. In the Irrigation Segment, the beginning of the North American harvest makes an outlook difficult to quantify. However, we do expect continued firmness in international markets."
An audio discussion of Valmont's third quarter results will be available live by Telephone by dialing 1-877-493-2981 and entering Conference ID#:52423637 or via Webcast at 8:00 a.m. CDT October 19, 2017 at https://engage.vevent.com/rt/valmontindustries_ao~52423637. A replay is available through the above link or by telephone (855) 859-2056 or (404) 537-3406, Conference ID#:52423637 beginning October 19, 2017 at 10:00 a.m. CDT through 12:00 p.m. CDT on October 26, 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)
Investment gain (loss)
Earnings before income taxes
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
Energy & Mining
Adjustment to LIFO method of inventory valuation
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.
Utility Support Structures:This segment consists of the manufacture of engineered steel and concrete structures for the global utility industry.
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;
Coatings:This segment consists of global galvanizing, painting and anodizing services.
Irrigation:This segment consists of the manufacture of agricultural irrigation equipment and related parts and services worldwide.
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 STATEMENT OF CASH FLOWS
(unaudited) and dollars in thousands
Year to Date
Cash flows from operating activities
Depreciation and Amortization
Change in working capital
Net cash flows from operating activities
Cash flows from investing activities
Purchase of property, plant, and equipment
Acquisitions, net of cash acquired
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 non-GAAP tables below disclose the impact on (a) diluted earnings per share of (1) restructuring costs, (2) deferred income tax expense from a change in U.K. statutory rate, and (3) the non-cash after-tax loss or gain associated with adjusting the fair value of Delta EMD Pty. Ltd (Delta EMD) shares owned to its quoted market price at September 30, 2017, and September 24, 2016, (b) operating income of restructuring costs, and (c) segment operating income of restructuring costs. Amounts may be impacted by rounding. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP measures.
Third QuarterEnded Sept. 30,2017
Diluted earningsper share
Year-to-DateSept. 30, 2017
Net earnings attributable to Valmont Industries, Inc. - as reported
Fair market value adjustment, Delta EMD *
Net earnings attributable to Valmont Industries, Inc. - Adjusted
Third QuarterEnded Sept. 24,2016
Year-to-DateSept. 24, 2016
Total pre-tax adjustments
Tax effect of adjustments
Deferred tax expense - Change in U.K. rate
* The mark-to-market adjustment for Delta EMD shares is not tax deductible.
Operating Income Reconciliation
Third QuarterEnded Sept. 24, 2016
Operating income - as reported
Adjusted Operating Income
Operating Income as a % of Sales
Adjusted Operating Income as a % of Sales
SOURCE Valmont Industries, Inc.