Valmont Industries, Inc. : Valmont Announces First Quarter Results
04/19/2012| 07:04pm US/Eastern
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Valmont Announces First Quarter Results
aprile 19, 2012
Highlights:
Net Income doubled on a 26% sales increase.
First quarter Utility Support Structures Segment
sales rose 52%, operating income increased 86%.
First quarter Irrigation Segment sales improved
30%, operating income increased 61%.
Coatings Segment sales rose 13%, operating income
increased 60%.
Operating income improved in the Engineered
Infrastructure Products Segment on a 17% increase
in sales.
Omaha, NE - Valmont Industries, Inc. (NYSE: VMI), a
leading global manufacturer of engineered products for
infrastructure, mechanized irrigation equipment for
agriculture, and a provider of coating services,
reported sales for the first quarter of $717.4 million
compared with $567.9 million for the same period of
2011. First quarter 2012 operating income was $82.8
million versus $45.3 million in 2011. First quarter
2012 net earnings were $52.3 million, or $1.96 per
diluted share, versus first quarter 2011 net earnings
of $25.6 million, or $0.97 per diluted share.
First Quarter Review:
"Record first quarter sales of both irrigation
equipment and utility structures were the primary
drivers of first quarter results," said Mr. Bay.
"This, combined with favorable weather conditions,
stable input costs and double-digit sales growth in all
of our segments resulted in a record first quarter
performance.
"Profitability in the Irrigation Segment benefited
from volume leverage and improved manufacturing
productivity. While volumes and profitability in the
Utility Support Structures Segment rose significantly,
margins continue to reflect competitive pricing on
large project shipments. The operating performance of
the Engineered Infrastructure Products Segment improved
as a result of better performance in the North American
and Asia-Pacific regions. However, in general, the
demand for lighting and traffic products still suffers
from the lack of a long-term U.S. highway bill and the
restraint in government spending in many parts of the
world. In the Coatings Segment, the quality of
operating results improved due to volume leverage and
increased productivity. Financial results in the
businesses classified in "Other" improved as
well.
"The positive impact of volume leverage on our
businesses resulted in a substantial improvement in
operating income as a percent of sales."
First Quarter Segment Review:
Utility Support Structures Segment (26% of 1st Quarter
Sales) Steel and concrete structures for the global
electric utility industry.
Sales of $191.2 million were 52% higher than 2011. The
sales increase reflects large project demand to upgrade
the North American transmission grid. In addition,
unseasonably mild weather in North America contributed
to a favorable environment for production and shipping
during the quarter.
The need to add capacity and improve the reliability of
the North American electrical transmission grid
continues to drive demand for utility transmission
structures. A period of underinvestment in transmission
capacity in North America followed by a period of rapid
economic growth in the 1990s resulted in the need for
transmission infrastructure improvements to better
support increased electricity demand. In addition,
occasional outages within the grid highlighted
vulnerabilities to its reliability. Provisions of the
2005 Energy bill were designed to address these
shortcomings, which have led to utilities increasing
their investment in transmission infrastructure. We
believe the current demand for large project orders is
part of a longer cycle of investment that will lead to
thousands of new miles being added to the transmission
grid over the next 10 years. This trend supports a
positive long-term outlook for our utility
business.
Sales in international utility markets were lower, as
increased sales in the Asia-Pacific region were more
than offset by lower project sales to emerging
markets.
Operating income increased 86% to $25.1 million and was
13.1% of sales. The increase in operating income was
due to the positive impact of volumes and the
associated operating leverage.
Irrigation Segment (27% of 1st Quarter Sales) Center pivot and linear move mechanized irrigation
equipment and parts for agriculture in global
markets.
Sales rose 30% to $196.3 million, reflecting favorable
drivers in the agricultural economy: The outlook for
farm income continues to be strong. Crop commodity
prices remained at high levels during the first
quarter. Dry weather in the Midwest agricultural
regions of North America heightened concerns about soil
moisture levels for the upcoming planting season. This,
along with the drivers of improved productivity and
water conservation, led to increased purchases of
irrigation equipment.
International markets experienced modest growth in
sales with most regions showing increases.
Operating income grew 61% to $38.4 million and was
19.6% of segment sales. The improvement in operating
income was the result of lower input costs, increased
productivity and volume leverage.
Engineered Infrastructure Products Segment (26% of 1st
Quarter Sales) Lighting, traffic and highway safety products,
wireless communication structures and components, and
industrial gratings and access systems worldwide.
First quarter sales were $197.9 million, a 17% increase
over 2011. In North America, commercial lighting
product sales rose. Transportation lighting and traffic
product sales were higher, in part reflecting the
positive impact of mild winter weather conditions.
Sales of wireless communication structures and
components also rose.
In international markets, European lighting and traffic
structures market conditions remained challenging.
In the Asia-Pacific region, sales of Webforge branded
industrial gratings and access systems rose, supported
by continued investment in the mining and industrial
economies in the region. Highway safety product sales
were higher in Australia. Sales of wireless
communication and lighting products were flat in
China.
Operating income increased more than threefold to $8.0
million, or 4.1% of segment sales. Increased sales and
the associated operating leverage led to the
improvement in profitability.
Coatings Segment (11% of 1st Quarter Sales) Hot-dip galvanizing, and other coatings to protect
against corrosion of steel and aluminum in global
markets.
Sales of $82.8 million were 13% greater than last year.
The increase in demand was broad-based and evident in
both North American and Australian markets. The effects
of a modest economic recovery in North American
markets, with an accompanying increase in industrial
production, were favorable drivers for galvanizing
demand. Industrial activity in the Asia-Pacific region
was higher than last year, when severe weather
conditions disrupted demand in Australia.
Operating income increased 60% to $16.5 million or
19.9% of segment sales as a result of higher volumes,
improved productivity and somewhat lower input
costs.
Outlook:
"Presently the drivers for our Utility Support
Structures Segment are particularly strong, said Mr.
Bay. "We expect utility demand to increase and
margins to improve modestly as the year progresses. In
the Engineered Infrastructure Products Segment, the
environment for lighting and traffic products is not as
favorable. Prospects for passage of a new U.S. highway
bill appear to have been deferred until after the U.S.
election in November, and the markets in Europe
continue to be challenging. However, we are pleased
with the improved quality of profitability in this
segment, and expect continued improvement in the
quality of segment profitability as the year
progresses. The macroeconomic environment for the
Irrigation Segment continues to be strong. The results
for the second half of the year will largely depend on
the outlook for the farm economy at that time. We
expect the quality of the operating performance in the
Coatings Segment to remain strong for the remainder of
the year.
"In light of the strong first quarter results, and
the factors outlined above, we are increasing our
earnings outlook for the year and now expect earnings
to exceed $8.00 per diluted share."
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#: 30179003 or via the Internet at 8:00
a.m. CDT April 20, 2012, 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#: 30179003
beginning April 20, 2012 at 10:00 a.m. CDT through
12:00 p.m. CDT on April 27, 2012.
Valmont is the global leader in designing and
manufacturing poles, towers and structures for lighting
and traffic, wireless communication and utility
markets, industrial access systems, highway safety
barriers 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.
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