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:

Third quarter

Year-to-date

Summarized Financial Info.

13 Weeks Ended

39 Weeks Ended

30-Sep-17

24-Sep-16

30-Sep-17

24-Sep-16

Net sales

$ 680,779

$ 610,247

$ 2,030,989

$ 1,847,101

Operating income

59,923

53,240

202,715

187,411

Operating income as a % of net sales GAAP

8.8%

8.7%

10.0%

10.1%

Operating income Adjusted*

59,923

58,305

202,715

192,476

Operating income as a % of net sales Adjusted*

8.8%

9.6%

10.0%

10.4%

Net earnings - GAAP

35,208

28,173

119,851

103,168

Net earnings - Adjusted *

35,603

33,488

120,246

109,518

Diluted EPS - GAAP net earnings

$ 1.55

$ 1.24

$ 5.28

$ 4.54

Average Shares Outstanding - Diluted

22,751

22,659

22,717

22,741

Diluted EPS - Adjusted net earnings *

$ 1.56

$ 1.48

$ 5.29

$ 4.82

Average Shares Outstanding - Diluted

22,751

22,659

22,717

22,741

* Please see Reg. G reconciliation table on last page.

  • Revenues increased 12% to $680.8 million, with increases in every segment except Energy & Mining
  • Operating income as a percent of sales was 8.8%
  • North American hurricanes negatively impacted third quarter earnings by an estimated 10 centsper diluted share
  • Diluted EPS increased 25% to $1.55, adjusted diluted EPS increased 5.4% to $1.56
  • Annual guidance updated to reflect logistical disruptions caused by hurricanes. Earnings per diluted share for the year expected to be between $6.90-7.04, compared to prior guidance of approximately $7.06

'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 Americaduring 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

Infrastructure-related

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 millionwere 9% higher than last year, mainly due to increased highway safety sales in Australiawhere 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 Chinacontinues to build out its wireless network infrastructure.

Operating income was $16.2 millionor 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 millionincreased 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 millionor 12.3% of sales, compared to $16.2 millionor 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 millionwere 18% higher than last year. In North America, increased pricing and stronger internal demand drove higher sales. Asia-Pacificsales 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 millionwere slightly lower than last year. Higher access system sales partly offset declines in mining consumables and offshore construction.

Operating income at $1.4 millionwas significantly lower at 1.8% of sales, compared to $3.9 millionor 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).

Agriculture-related

Irrigation Segment (21% of Sales)
Agricultural irrigation equipment, parts, services and tubular products.

Sales of $147.4 millionrose 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.

Outlook:

'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 7.04per 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. CDTOctober 19, 2017at 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, 2017at 10:00 a.m. CDTthrough 12:00 p.m. CDTon 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)

(unaudited)

Third Quarter

Year-to-Date

13 Weeks Ended

39 Weeks Ended

30-Sep-17

24-Sep-16

30-Sep-17

24-Sep-16

Net sales

$ 680,779

$ 610,247

$ 2,030,989

$ 1,847,101

Cost of sales

517,185

455,224

1,519,510

1,355,992

Gross profit

163,594

155,023

511,479

491,109

Selling, general and administrative expenses

103,671

101,783

308,764

303,698

Operating income

59,923

53,240

202,715

187,411

Other income (expense)

Interest expense

(11,190)

(11,100)

(33,312)

(33,276)

Interest income

1,311

771

3,205

2,290

Investment gain (loss)

544

1,455

2,935

591

Other

(27)

(577)

(1,251)

(140)

(9,362)

(9,451)

(28,423)

(30,535)

Earnings before income taxes

50,561

43,789

174,292

156,876

Income tax expense

13,895

14,268

50,343

49,742

Net earnings

36,666

29,521

123,949

107,134

Less: Earnings attributable to non-controlling interests

(1,458)

(1,348)

(4,098)

(3,966)

Net earnings attributable to Valmont Industries, Inc.

$ 35,208

$ 28,173

$ 119,851

$ 103,168

Average shares outstanding (000's) - Basic

22,527

22,505

22,505

22,602

Earnings per share - Basic

$ 1.56

$ 1.25

$ 5.33

$ 4.56

Average shares outstanding (000's) - Diluted

22,751

22,659

22,717

22,741

Earnings per share - Diluted

$ 1.55

$ 1.24

$ 5.28

$ 4.54

Cash dividends per share

$ 0.375

$ 0.375

$ 1.125

$ 1.125

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(unaudited)

Third Quarter

Year-to-Date

13 Weeks Ended

39 Weeks Ended

30-Sep-17

24-Sep-16

30-Sep-17

24-Sep-16

Net sales

Engineered Support Structures

$ 221,508

$ 203,184

$ 619,647

$ 584,071

Utility Support Structures

179,760

150,667

538,994

446,432

Energy and Mining

79,755

81,552

234,934

234,693

Coatings

82,593

70,082

235,842

213,961

Infrastructure products

563,616

505,485

1,629,417

1,479,157

Irrigation

147,428

127,809

502,939

438,575

Less: Intersegment sales

(30,265)

(23,047)

(101,367)

(70,631)

Total

$ 680,779

$ 610,247

$ 2,030,989

$ 1,847,101

Operating Income

Engineered Support Structures

$ 16,226

$ 20,323

$ 45,683

$ 53,615

Utility Support Structures

22,108

16,195

65,005

48,201

Energy & Mining

1,417

3,941

9,195

9,096

Coatings

14,577

11,696

36,091

37,220

Infrastructure products

54,328

52,155

155,974

148,132

Irrigation

18,235

15,308

83,196

75,216

Adjustment to LIFO method of inventory valuation

(1,626)

(2,066)

(2,839)

(3,192)

Corporate

(11,014)

(12,157)

(33,616)

(32,745)

Total

$ 59,923

$ 53,240

$ 202,715

$ 187,411

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.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

30-Sep-17

24-Sep-16

ASSETS

Current assets:

Cash and cash equivalents

$ 493,490

$ 349,375

Accounts receivable, net

492,842

455,692

Inventories

403,234

379,625

Prepaid expenses

50,064

69,231

Refundable and deferred income taxes

8,493

20,342

Total current assets

1,448,123

1,274,265

Property, plant and equipment, net

522,424

525,640

Goodwill and other assets

639,624

584,138

$ 2,610,171

$ 2,384,043

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Current installments of long-term debt

$ 949

$ 895

Notes payable to banks

197

853

Accounts payable

216,104

170,888

Accrued expenses

187,732

178,834

Dividend payable

8,478

8,455

Total current liabilities

413,460

359,925

Long-term debt, excluding current installments

754,202

755,584

Other long-term liabilities

289,914

266,233

Shareholders' equity

1,152,595

1,002,301

$ 2,610,171

$ 2,384,043

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(unaudited) and dollars in thousands

Year to Date

Year to Date

30-Sep-17

24-Sep-16

Cash flows from operating activities

Net Earnings

$ 123,949

$ 107,134

Depreciation and Amortization

63,500

61,242

Change in working capital

(47,072)

(31,596)

Other

(5,973)

(9,526)

Net cash flows from operating activities

134,404

127,254

Cash flows from investing activities

Purchase of property, plant, and equipment

(39,898)

(42,233)

Acquisitions, net of cash acquired

(5,362)

-

Other

3,236

1,114

Net cash flows from investing activities

(42,024)

(41,119)

Cash flows from financing activities

Principal payments on long-term borrowings

(658)

(1,563)

Purchase of treasury shares

-

(46,581)

Dividends paid

(25,385)

(25,604)

Other

4,072

(8,608)

Net cash flows from financing activities

(21,971)

(82,356)

Effect of exchange rates on cash and cash equivalents

23,133

(3,478)

Net change in cash and cash equivalents

93,542

301

Cash and cash equivalents - beginning of year

399,948

349,074

Cash and cash equivalents - end of period

$ 493,490

$ 349,375

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS

REGULATION G RECONCILIATION

(Dollars in thousands, except per share amounts)

(unaudited)

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 Quarter
Ended Sept. 30,
2017

Diluted earnings
per share

Year-to-Date
Sept. 30, 2017

Diluted
earnings per
share

Net earnings attributable to Valmont Industries, Inc. - as reported

$ 35,208

$ 1.55

$ 119,851

$ 5.28

Fair market value adjustment, Delta EMD *

395

0.02

395

0.02

Net earnings attributable to Valmont Industries, Inc. - Adjusted

$ 35,603

$ 1.56

$ 120,246

$ 5.29

Average shares outstanding (000's) - Diluted

22,751

22,717

Third Quarter
Ended Sept. 24,
2016

Diluted earnings
per share

Year-to-Date
Sept. 24, 2016

Diluted
earnings per
share

Net earnings attributable to Valmont Industries, Inc. - as reported

$ 28,173

$ 1.24

$ 103,168

$ 4.54

Restructuring expenses

5,065

0.22

5,065

0.22

Fair market value adjustment, Delta EMD *

(65)

-

970

0.04

Total pre-tax adjustments

$ 33,173

$ 1.46

$ 109,203

$ 4.80

Tax effect of adjustments

(1,545)

(0.07)

(1,545)

(0.07)

Deferred tax expense - Change in U.K. rate

1,860

0.08

1,860

0.08

Net earnings attributable to Valmont Industries, Inc. - Adjusted

$ 33,488

$ 1.48

$ 109,518

$ 4.82

Average shares outstanding (000's) - Diluted

22,659

22,741

* The mark-to-market adjustment for Delta EMD shares is not tax deductible.

Operating Income Reconciliation

Third Quarter
Ended Sept. 24,
2016

Year-to-Date
Sept. 24, 2016

Operating income - as reported

$ 53,240

$ 187,411

Restructuring expenses

5,065

5,065

Adjusted Operating Income

58,305

192,476

Net Sales

610,247

1,847,101

Operating Income as a % of Sales

8.7%

10.1%

Adjusted Operating Income as a % of Sales

9.6%

10.4%

SOURCE Valmont Industries, Inc.

Valmont Industries Inc. published this content on 18 October 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 19 October 2017 10:30:07 UTC.

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