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EX-99.2 - EX-99.2 - VALMONT INDUSTRIES INCa17-11590_1ex99d2.htm
8-K - 8-K - VALMONT INDUSTRIES INCa17-11590_18k.htm

Exhibit 99.1

 

 

News Release

For Immediate Release

 

 

 

Contact:

Jeff Laudin

April 19, 2017

Phone:

402-963-1158

 

Fax:

402-963-1198

 

 

Valmont Reports First Quarter 2017 Results

 

Omaha, NE - 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 2017 results.

 

First Quarter Highlights:

 

 

 

First Quarter

 

 

 

13 Weeks Ended

 

Summarized Financial Information

 

1-Apr-17

 

26-Mar-16

 

Net sales

 

$

637,474

 

$

596,605

 

Operating income

 

64,502

 

62,365

 

Operating income as a % of net sales GAAP

 

10.1

%

10.5

%

Net earnings

 

38,979

 

32,969

 

Diluted EPS

 

$

1.72

 

$

1.45

 

 

 

 

 

 

 

Average Shares Outstanding - Diluted

 

22,660

 

22,816

 

 

·                  Revenues increased 7% to $637.5 million

 

·                  Operating income increased largely due to improved performance in the Utility Support Structures, Irrigation, and Energy and Mining Segments, offset somewhat by margin compression in the Engineered Support Structures and Coatings Segments

 

·                  Operating income increased $2.1 million, which included $2.8 million in higher LIFO expense related to increased raw material costs and $1.8 million of higher deferred compensation costs that is offset by increased other income. Excepting these items, the increase in operating income was $6.7 million, or 11% over 2016

 

·                  Diluted earnings per share increased 19% to $1.72

 

·                  Reaffirming annual guidance for earnings to be slightly above $7.00 per diluted share

 

“Revenue increased across all segments, led by a strong performance in Utility Support Structures Segment,” said Mogens C. Bay, Valmont’s Chairman and Chief Executive Officer. “All segments saw improved demand and contributed to the sales growth, which supports our outlook for revenue and earnings growth in 2017.

 

-more-

 

Valmont Industries, Inc. · One Valmont Plaza · Omaha, Nebraska 68154 U.S.A. ·

 



 

“As expected, rising steel and zinc costs pressured operating margins in Engineered Support Structures and Coatings segments, where sales price increases somewhat lagged cost increases. All other segments had good operating performance.”

 

First Quarter Segment Review

 

Infrastructure-related

 

Engineered Support Structures (28% of Sales)

Poles, towers and components for the global lighting, traffic and wireless communication markets, and highway safety products.

 

Sales of $180.6 million were 2% higher than last year as a result of improved global wireless communication product and intercompany sales.

 

Lighting sales declined in modestly North America, however order rates are solid. Pricing in North America did yet not reflect rising steel costs due to competitive market pressures. In Europe, sales of lighting and traffic structures declined due to lower export sales. Sales of lighting and traffic products were comparable in the Asia-Pacific region.

 

Wireless communication product sales rose mainly due to increased North American demand for poles, towers and components. In Australia, sales increases were driven by wireless carriers building out their networks. In China, sales were comparable to last year.

 

Operating income was $9.2 million or 5.1% of sales compared to $12.5 million, or 7.0% of sales in 2016. Higher steel costs compressed segment profitability.

 

Utility Support Structures (27% of Sales)

Steel and concrete structures for the global electric utility industry.

 

Sales of $174.6 million increased 21% over last year primarily driven by higher volumes. Sales growth is being supported by utility reliability investments in the North American transmission grid, renewables, interconnecting regional transmission grids, and a favorable sales mix.

 

Operating income increased to $22.7 million or 13.0% of sales, compared to $14.4 million or 10.0% in 2016, benefitting from higher volume and operating leverage.

 

Coatings Segment (11% of Sales)

Global galvanizing, painting and anodizing services.

 

Sales of $73.5 million were 7% higher than last year, mainly due to increased price to recover higher zinc cost. Following a weak start to the year, volumes increased as the quarter progressed. The sales mix consisted of higher intercompany, and lower external volumes, particularly to the solar energy and oil and gas markets.

 

-more-

 



 

Operating income was $9.4 million, or 12.8% of sales, compared to $11.4 million, or 16.6% of sales in 2016. A greater mix of intercompany volumes, which carry a lower margin and  a sharp rise in zinc costs pressured margins.  Included in Q1 results were final startup costs associated with the previously communicated opening of a new facility in Texas.

 

Energy and Mining Segment (12% of Sales)

Offshore structures, engineered access systems and grinding media.

 

Segment sales of $78.0 million were 8% higher than last year with each major product line contributing to growth. Offshore wind structures and component sales increased, supported by continued development in Europe’s North Sea region. The pipeline of sales to non-traditional markets continues to improve, helping to offset weak demand from the oil and gas exploration markets. Access systems sales increased due to an improving construction market as well as stronger commodity prices supporting mining sales in Australia. Grinding media sales increased as pricing rose in-line with higher input costs.

 

Operating income increased to $3.8 million or 4.8% of sales compared to $1.9 million, or 2.6% of sales in 2016. The increase was driven by improved operating leverage as well as benefits from restructuring actions taken within the Australia region in 2016.

 

Agriculture-related

 

Irrigation Segment (26% of Sales)

Agricultural irrigation equipment, parts, services and tubular products.

 

Global sales of $167.2 million were 6% above last year. North American sales were up slightly from last year, reflecting stabilizing demand. International sales rose broadly, led by a stronger market in Brazil. Favorable currency translation contributed to the international sales gains.

 

Operating income was higher at $30.3 million, or 18.1% of sales compared to $28.9 million, or 18.2% of sales in 2016. The quality of segment profitability remained strong despite rising raw material costs and some competitive pricing pressure, as better sales volumes, cost and productivity improvements offset inflationary effects.

 

Outlook:

 

“We are off to a good start to the year,” Mr. Bay said. “We are encouraged by signs of improved demand in certain of our markets, evidenced by our second consecutive quarter of improved sales. While the current volatility in certain raw material costs, and weak farm economy fundamentals, could still impact some of our businesses, we reconfirm our sales, earnings and cash flow guidance for the year.”

 

-more-

 



 

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#:52418614 or via Webcast at 8:00 a.m. CDT April 20, 2017 at https://engage.vevent.com/rt/valmontindustries_ao~52418614.  A replay is available through the above link or by telephone (855) 859-2056 or (404) 537-3406, Conference ID#:52418614 beginning April 20, 2017 at 10:00 a.m. CDT through 12:00 p.m. CDT on April 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.

 

-more-

 



 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

 

First Quarter

 

 

 

13 Weeks Ended

 

 

 

1-Apr-17

 

26-Mar-16

 

Net sales

 

$

637,473

 

$

596,605

 

Cost of sales

 

472,868

 

435,636

 

Gross profit

 

164,605

 

160,969

 

Selling, general and administrative expenses

 

100,103

 

98,604

 

Operating income

 

64,502

 

62,365

 

Other income (expense)

 

 

 

 

 

Interest expense

 

(11,304

)

(11,054

)

Interest income

 

928

 

811

 

Gain (loss) on investments (unrealized)

 

1,237

 

(1,430

)

Other

 

(39

)

(248

)

 

 

(9,178

)

(11,921

)

Earnings before income taxes and equity in earnings of nonconsolidated subsidiaries

 

55,324

 

50,444

 

Income tax expense

 

15,363

 

16,273

 

Net earnings

 

39,961

 

34,171

 

Less: Earnings attributable to non-controlling interests

 

(982

)

(1,202

)

Net earnings attributable to Valmont Industries, Inc.

 

$

38,979

 

$

32,969

 

 

 

 

 

 

 

Average shares outstanding (000’s) - Basic

 

22,472

 

22,700

 

Earnings per share - Basic

 

$

1.73

 

$

1.45

 

 

 

 

 

 

 

Average shares outstanding (000’s) - Diluted

 

22,660

 

22,816

 

Earnings per share - Diluted

 

$

1.72

 

$

1.45

 

 

 

 

 

 

 

Cash dividends per share

 

$

0.375

 

$

0.375

 

 

-more-

 



 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(unaudited)

 

 

 

First Quarter

 

 

 

13 Weeks Ended

 

 

 

1-Apr-17

 

26-Mar-16

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

Engineered Support Structures

 

$

180,558

 

$

176,971

 

Utility Support Structures

 

174,612

 

144,520

 

Energy & Mining

 

77,972

 

72,449

 

Coatings

 

73,468

 

68,581

 

Infrastructure products

 

506,610

 

462,521

 

 

 

 

 

 

 

Irrigation

 

167,224

 

158,514

 

Less: Intersegment sales

 

(36,361

)

(24,430

)

Total

 

$

637,473

 

$

596,605

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

Engineered Support Structures

 

$

9,213

 

$

12,475

 

Utility Support Structures

 

22,708

 

14,424

 

Energy and Mining

 

3,837

 

1,902

 

Coatings

 

9,406

 

11,413

 

Infrastructure products

 

45,164

 

40,214

 

 

 

 

 

 

 

Irrigation

 

30,291

 

28,895

 

Adjustment to LIFO inventory valuation method

 

(779

)

2,027

 

Corporate

 

(10,174

)

(8,771

)

Total

 

$

64,502

 

$

62,365

 

 

In first quarter of 2017, Valmont changed its reportable segment operating income to separate out the LIFO (expense) benefit.

Prior year information has been updated to reflect this change.  Valmont has aggregated its business segments into five reportable segments as follows:

 

Engineered Support Structures: This segment consists of the manufacture of engineered metal, composite, and wood 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.

 

-more-

 



 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

 

 

1-Apr-17

 

26-Mar-16

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

425,216

 

$

387,714

 

Accounts receivable, net

 

455,044

 

449,379

 

Inventories

 

389,156

 

350,768

 

Prepaid expenses

 

54,532

 

46,080

 

Refundable and deferred income taxes

 

7,325

 

18,897

 

Total current assets

 

1,331,273

 

1,252,838

 

Property, plant and equipment, net

 

519,658

 

532,507

 

Goodwill and other assets

 

615,957

 

614,517

 

 

 

$

2,466,888

 

$

2,399,862

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current installments of long-term debt

 

$

860

 

$

1,110

 

Notes payable to banks

 

957

 

2,402

 

Accounts payable

 

194,525

 

183,059

 

Accrued expenses

 

177,894

 

169,479

 

Dividend payable

 

8,468

 

8,527

 

Total current liabilities

 

382,704

 

364,577

 

Long-term debt, excluding current installments

 

754,523

 

756,878

 

Other long-term liabilities

 

288,381

 

298,256

 

Shareholders’ equity

 

1,041,280

 

980,151

 

 

 

$

2,466,888

 

$

2,399,862

 

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) and dollars in thousands

 

 

 

13 Weeks Ended

 

13 Weeks Ended

 

 

 

1-Apr-17

 

26-Mar-16

 

Cash flows from operating activities

 

 

 

 

 

Net Earnings

 

$

39,961

 

$

34,171

 

Depreciation and amortization

 

20,827

 

20,598

 

Change in restricted cash - pension plan

 

12,568

 

 

Contribution to defined benefit pension plan

 

(25,379

)

 

Change in working capital

 

(28,675

)

16,427

 

Other

 

16,681

 

9,331

 

Net cash flows from operating activities

 

$

35,983

 

80,527

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchase of property, plant, and equipment

 

$

(14,168

)

$

(13,961

)

Other

 

(1,413

)

(2,180

)

Net cash flows from investing activities

 

$

(15,581

)

$

(16,141

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Net borrowings on short and long-term agreements

 

$

38

 

$

(220

)

Purchase of treasury shares

 

 

(16,939

)

Dividends paid

 

(8,445

)

(8,571

)

Other

 

5,547

 

2,356

 

Net cash flows from financing activities

 

$

(2,860

)

$

(23,374

)

Effect of exchange rates on cash and cash equivalents

 

7,726

 

(2,372

)

Net change in cash and cash equivalents

 

25,268

 

38,640

 

Cash and cash equivalents - beginning of year

 

399,948

 

349,074

 

Cash and cash equivalents - end of period

 

$

425,216

 

$

387,714

 

 

-end-