OMAHA, Neb., April 22, 2015
/PRNewswire/ -- Valmont Industries, Inc. (NYSE: VMI), a leading global provider of engineered
products and services for infrastructure and mechanized irrigation
equipment for agriculture, reported first quarter sales of
$670.4 million compared with
$751.7 million for the same period of
2014. First quarter 2015 operating income was $57.7 million versus $98.8
million in 2014. First quarter reported diluted earnings per
share were $1.28 compared with
$2.08 in 2014. Included in 2015 and
2014 first quarter earnings were certain items affecting
comparability. Without these items, diluted earnings per share
were $1.28 in 2015 and $2.20 in 2014. (See Regulation G
reconciliation on last page.)
First Quarter Review:
"As expected, compared to the historically strong first quarter
results of last year, lower sales and operating income in our
Irrigation and Utility Support Structures Segments drove
unfavorable quarterly comparisons," said Mogens C. Bay, Valmont's Chairman and Chief
Executive Officer. "In the Utility Support Structures Segment,
lower volumes, competitive pricing and a less favorable mix led to
decreased sales and significantly lower operating income compared
with last year. Farmers cut back investment in irrigation equipment
in response to weaker crop prices and lower projected farm income.
Higher Engineered Infrastructure Products Segment sales were the
result of acquisitions made last year and project sales, which more
than offset the negative impacts of the softer industrial and
mining economy in Australia and
currency translation. Coatings Segment sales were also negatively
impacted by the Australian economy as well as reduced internal
North American demand.
"First quarter operating income as a percent of sales when
compared to a relatively strong first quarter last year, was 8.6%
compared to 13.1% in 2014, as a result of lower volumes and pricing
in the Utility Support Structures Segment and volume reductions in
the Irrigation Segment.
"A significantly stronger U.S. dollar contributed to lower U.S.
dollar translated sales and operating income from international
operations. This adversely impacted first quarter 2015 sales and
operating income by approximately $31.0
million and $2.3 million
respectively.
"At this time, we do not expect a meaningful improvement in the
external environment. Consequently, we are undertaking certain
restructuring actions described in more detail below."
First Quarter Segment Review:
Engineered Infrastructure Products Segment (34% of 1st
Quarter Sales)
Engineered structures and components for global lighting and
traffic, wireless communication, roadway safety, offshore
structures and access systems applications.
First quarter sales were $238.2
million, a 4% increase over 2014. The increase was due to
the revenue contribution from acquisitions made during 2014, better
results in Europe and Asia, partly offset by foreign exchange
translation effects.
In North America, sales
increased as a result of the addition of revenue from the
Shakespeare acquisition completed in October
2014. Improved activity in the commercial lighting market
was offset by reduced wireless communication and intercompany
utility sales.
In Europe, sales increased due
to the Valmont SM acquisition and a large lighting project supplied
to the Middle East. Overall market
conditions in Europe were
comparable with 2014.
In the Asia-Pacific region,
positive sales comparisons in China were more than offset by weaker sales in
Australia.
Operating income decreased 13% to $11.9
million, or 5.0% of segment sales compared to 6.0% in 2014,
mostly due to reduced profitability in Australia and foreign currency
translation.
Utility Support Structures Segment (25% of 1st Quarter
Sales)
Steel and concrete structures for the global electric utility
industry.
Sales of $176.3 million were 18%
lower than 2014 mostly due to continued competitive pricing,
significantly lower steel costs and a modest reduction in volume.
Last year's first quarter results reflected a favorable backlog
carried forward from 2013. Operating income declined 53% to
$15.4 million, which represents 8.7%
of segment sales compared to 15.3% in 2014.
Coatings Segment (11% of 1st Quarter Sales)
Global galvanizing, painting and anodizing services.
Sales of $74.4 million were 10%
lower than last year due to weaker markets in Australia, currency translation and reduced
internal demand in North America.
Operating income declined 21% to $11.0
million or 14.8% of segment sales compared to 16.9% in
2014.
Irrigation Segment (22% of 1st Quarter Sales)
Agricultural irrigation equipment and related parts and services
worldwide.
Sales of $154.5 million declined
27% from 2014, due to lower volumes in both North American and
International markets, compared to last year's relatively strong
first quarter.
North American farm incomes are forecast to be substantially
lower in 2015, which has caused farmers to curb capital
investments. Lower crop commodity prices and political conflicts
have led to reduced demand in certain international markets. Sales
in Brazil were lower than 2014,
due to the effect of a severe drought that limited irrigation
permits, a weaker currency and economic uncertainty.
Operating income at $24.3 million
was 44% lower than last year, yet still a solid 15.7% of segment
sales compared to 20.3% in 2014. The decline in operating income
was due to the impact of lower volumes and associated deleverage on
fixed operating costs.
Restructuring Plan:
Given that market conditions in a number of our businesses are
not expected to improve over the near-term, our Board of Directors
has authorized a broad restructuring plan of up to $60 million. The initial restructuring actions
will involve the consolidation of operations and other cost
reduction activities, resulting in pre-tax charges of approximately
$30 million. The charges will include
$19 million of cash expenses and
$11million of non-cash charges. These
actions will take place over the remainder of 2015. Most of the
restructuring activities will take place in our Infrastructure
businesses where an improvement in the Australian industrial and
mining economies is not expected near term and public spending for
infrastructure in Europe and
North America continues to be
constrained. The cash expenses are expected to be recovered through
lower operating costs within 12 to 18 months. Of the above costs,
approximately $0.8 million of pre-tax
cash expenses were incurred during the first quarter related to the
restructuring.
We are also evaluating other actions that could result in as
much as $30 million of additional
charges, most of which would be non-cash impairment charges.
Outlook:
"None of the long term positive drivers of our businesses have
changed," said Mr. Bay. "Current market conditions remain
challenging, but what we can control is our cost structure and
organization to be as competitive as we can. Our focus on lean
activities and operational excellence should better position us to
be prepared for when our markets recover. Our planned restructuring
will consolidate operations and lower costs without affecting our
ability to serve our customers and maintain our leadership
positions in the markets we serve."
An audio discussion of Valmont's first quarter results by
Mogens C. Bay, Chairman and Chief
Executive Officer and Mark C.
Jaksich, Executive Vice President and Chief Financial
Officer, will be available live by telephone by dialing
1-877-493-2981 and entering Conference ID#: 66205079 or via
the Internet at 8:00 a.m. CDT
April 23, 2015, by pointing browsers
to: https://engage.vevent.com/rt/valmontindustries_ao~042315.
After the event you may listen by accessing the above link or
by telephone. Dial 1-855-859-2056 or 404-537-3406, and enter the
Conference ID#: 66205079 beginning April 23, 2015 at 10:00
a.m. CDT through 12:00 p.m.
CDT on April 30, 2015.
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)
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
|
|
13 Weeks
Ended
|
|
|
|
|
28-Mar-15
|
|
29-Mar-14
|
|
|
Net sales
|
|
$ 670,398
|
|
$ 751,740
|
|
|
Cost of
sales
|
|
504,944
|
|
544,758
|
|
|
Gross profit
|
|
165,454
|
|
206,982
|
|
|
Selling, general and
administrative expenses
|
|
107,771
|
|
108,134
|
|
|
Operating income
|
|
57,683
|
|
98,848
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest expense
|
|
(11,128)
|
|
(8,197)
|
|
|
Interest income
|
|
874
|
|
1,739
|
|
|
Other
|
|
1,016
|
|
(5,812)
|
|
|
|
|
(9,238)
|
|
(12,270)
|
|
|
|
|
|
|
|
|
|
Earnings before income taxes
|
|
48,445
|
|
86,578
|
|
|
Income tax
expense
|
|
16,938
|
|
30,015
|
|
|
Net earnings
|
|
31,507
|
|
56,563
|
|
|
Less: Earnings
attributable to non-controlling interests
|
|
(768)
|
|
(583)
|
|
|
Net earnings attributable to Valmont Industries, Inc.
|
|
$
30,739
|
|
$
55,980
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding (000's) - Basic
|
|
23,868
|
|
26,715
|
|
|
Earnings per share -
Basic
|
|
$
1.29
|
|
$
2.09
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding (000's) - Diluted
|
|
23,982
|
|
26,950
|
|
|
Earnings per share -
Diluted
|
|
$
1.28
|
|
$
2.08
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share
|
|
$
0.375
|
|
$
0.250
|
|
|
|
|
|
|
|
|
|
|
|
|
VALMONT
INDUSTRIES, INC. AND SUBSIDIARIES
|
|
|
SUMMARY OPERATING
RESULTS
|
|
|
(Dollars in
thousands)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
First
Quarter
|
|
|
|
|
13 Weeks
Ended
|
|
|
|
|
28-Mar-15
|
|
29-Mar-14
|
|
|
Sales
|
|
|
|
|
|
|
Engineered Infrastructure
Products
|
|
$ 238,393
|
|
$ 228,462
|
|
|
Utility Support
Structures
|
|
176,341
|
|
214,727
|
|
|
Coatings
|
|
74,360
|
|
82,171
|
|
|
Infrastructure products
|
|
489,094
|
|
525,360
|
|
|
|
|
|
|
|
|
|
Irrigation
|
|
154,476
|
|
212,733
|
|
|
Other
|
|
53,858
|
|
58,602
|
|
|
Less: Intersegment
sales
|
|
(27,030)
|
|
(44,955)
|
|
|
Total
|
|
$
670,398
|
|
$
751,740
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
|
|
|
|
Engineered Infrastructure
Products
|
|
$ 11,982
|
|
$ 13,709
|
|
|
Utility Support
Structures
|
|
15,357
|
|
32,757
|
|
|
Coatings
|
|
11,000
|
|
13,886
|
|
|
Infrastructure products
|
|
38,339
|
|
60,352
|
|
|
|
|
|
|
|
|
|
Irrigation
|
|
24,302
|
|
43,146
|
|
|
Other
|
|
6,598
|
|
8,550
|
|
|
Corporate
|
|
(11,556)
|
|
(13,200)
|
|
|
Total
|
|
$
57,683
|
|
$
98,848
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valmont has
aggregated its business segments into four reportable segments as
follows:
|
|
|
|
|
|
Engineered
Infrastructure Products:This segment consists of the
manufacture of engineered structures and components for global
lighting and traffic, wireless communication, offshore, roadway
safety, and access systems applications.
|
|
Utility
Support Structures:This segment consists of the manufacture
of engineered steel and concrete structures for the global utility
industry.
|
|
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.
|
|
In addition to
these four reportable segments, Valmont also has other businesses
that individually are not more than 10% of consolidated net sales.
These businesses, which include the manufacture of forged steel
grinding media, tubular products, and industrial fasteners, are
reported in the "Other" category.
|
|
|
|
VALMONT
INDUSTRIES, INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
28-Mar-15
|
|
|
29-Mar-14
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$ 318,366
|
|
|
$ 488,195
|
|
|
Accounts receivable,
net
|
503,649
|
|
|
529,693
|
|
|
Inventories
|
379,514
|
|
|
424,825
|
|
|
Prepaid expenses
|
48,344
|
|
|
57,913
|
|
|
Refundable and deferred
income taxes
|
53,032
|
|
|
57,935
|
|
|
Total current assets
|
1,302,905
|
|
|
1,558,561
|
|
|
Property, plant and
equipment, net
|
586,746
|
|
|
612,203
|
|
|
Goodwill and other
assets
|
694,479
|
|
|
715,102
|
|
|
|
$
2,584,130
|
|
|
$
2,885,866
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current installments of
long-term debt
|
$ 1,070
|
|
|
$
188
|
|
|
Notes payable to
banks
|
14,459
|
|
|
14,860
|
|
|
Accounts payable
|
189,349
|
|
|
234,218
|
|
|
Accrued expenses
|
169,824
|
|
|
177,437
|
|
|
Income taxes
payable
|
-
|
|
|
9,967
|
|
|
Dividend payable
|
8,889
|
|
|
6,721
|
|
|
Total current liabilities
|
383,591
|
|
|
443,391
|
|
|
Long-term debt,
excluding current installments
|
765,762
|
|
|
479,141
|
|
|
Other long-term
liabilities
|
290,912
|
|
|
343,531
|
|
|
Shareholders'
equity
|
1,143,865
|
|
|
1,619,803
|
|
|
|
$
2,584,130
|
|
|
$
2,885,866
|
|
|
|
|
|
|
|
|
|
|
|
|
VALMONT
INDUSTRIES, INC. AND SUBSIDIARIES
|
SUMMARY OF EFFECT
OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED
RESULTS
|
REGULATION G
RECONCILIATION
|
(Dollars in
thousands)
|
(unaudited)
|
The schedule below
details the fair value adjustments of the Company's Delta EMD Pty.
Ltd (Delta EMD) shares to its quoted market price at each
quarter-end and the restructuring expense incurred in 2015.
Earnings per share for each item are calculated separately.
Therefore the sum of earnings per share amounts for each item below
may not agree with the total. We believe it is useful for the
non-GAAP adjusted net earnings to be taken into consideration with
the reported GAAP measure which is net
earnings.
|
|
|
|
|
|
|
|
|
|
|
Quarter ended March
28, 2015
|
Diluted earnings per
share
|
|
Quarter ended March
29, 2014
|
|
Diluted earnings per
share
|
Net earnings
attributable to Valmont Industries, Inc.
- as
reported
|
$ 30,739
|
$
1.28
|
|
$ 55,980
|
|
$
2.08
|
|
|
|
|
|
|
|
Restructuring
expenses (pre-tax $785 in 2015)
|
510
|
0.02
|
|
-
|
|
-
|
|
|
|
|
|
|
|
Fair market value
adjustment, Delta EMD - after-tax and net of received dividends
($5,000 in 2015 and $0 in 2014)
|
(600)
|
(0.02)
|
|
3,386
|
|
0.13
|
|
|
|
|
|
|
|
Net earnings
attributable to Valmont Industries, Inc. - Adjusted
|
$ 30,649
|
$
1.28
|
|
$ 59,366
|
|
$
2.20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/valmont-announces-first-quarter-2015-results-and-a-restructuring-plan-300070620.html
SOURCE Valmont Industries, Inc.