OMAHA, Neb., July 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 second
quarter sales of $682.1 million
compared with $842.6 million for the
same period of 2014. Second quarter 2015 operating income was
$54.0 million ($68.3 million before restructuring charges),
versus $104.8 million in 2014. Second
quarter net income was $27.9 million
versus $64.0 million in 2014, or
$1.19 per diluted share compared to
$2.38 in 2014. Excluding the effects
of restructuring, second quarter earnings per diluted share were
$1.61. (See
Reg. G table on last page).
For the first six months of 2015, sales were $1,352.5 million versus $1,594.3 million in 2014. Valmont's first-half
net earnings were $58.6 million, or
$2.47 per diluted share, compared
with 2014 first-half net earnings of $120.0
million, or $4.46 per diluted
share. Excluding the effects of restructuring, six-month earnings
per diluted share were $2.89.
Second Quarter Review:
"Each of our segments continued to face challenging
end-markets," said Mogens C. Bay,
Valmont's Chairman and Chief Executive Officer. "In the Engineered
Infrastructure Products Segment, reduced capital investments in
oil, gas and mining negatively affected certain of our businesses.
However, North American results improved aided by the Shakespeare
acquisition and better lighting and traffic markets. In the Utility
Support Structures Segment, lower volumes and competitive pricing
substantially reduced results. Continued weakness in the Australian
industrial economy adversely affected the Coatings segment. Global
demand for our Irrigation products decreased as a result of lower
net farm income resulting in reduced investments by farmers.
"We have made significant progress on our previously announced
restructuring. In North America,
the Utility Support Structures Segment consolidated some production
into lower cost operating sites, reducing the overall cost
structure. In Australia, plant
consolidations took place both in the Coatings and Engineered
Infrastructure Products Segments. In Europe, we also reduced our cost structure.
The total pre-tax cost of the above actions, plus other cost
reductions was $14.3 million.
Non-cash asset impairments were $9.3
million and cash charges were $5.0
million.
"Operating income was 8.0% of net sales. Excluding restructuring
costs, operating income was 10.0% of net sales, compared with 12.4%
in 2014."
Second Quarter Segment Review:
Engineered Infrastructure Products Segment(37% of 2nd
Quarter Sales)
Engineered structures and components for global lighting and
traffic, wireless communication, roadway safety, offshore
structures and access systems applications.
Second quarter sales were $261.1
million, a 14% decrease from 2014, of which currency
translation contributed $29.3 million
to the decline. The primary drivers of lower comparisons were in
the offshore structures and access systems product lines.
In North America, sales of
lighting and traffic products increased mainly due to the
acquisition of Shakespeare, a composite structures manufacturer, in
October, 2014. Wireless communication structure sales declined due
to a slowdown in network investment by a large carrier.
In Europe, lighting and traffic
structure sales rose in local currency due to the completion of a
large project. Offshore structure sales were negatively impacted by
customer delays in introducing new wind products, and deferred oil
and gas investment.
In the Asia-Pacific region,
growing investment in China's 4G
networks led to a significant sales increase in wireless
communication structures. However, engineered access system sales
declined due to lower oil and gas investment in the region and
continued weakness in the Australian mining sector.
Operating income was $17.4
million, or 6.7% of segment sales. Excluding the
restructuring costs, operating income as a percent of sales was
8.4% compared with 9.4% in 2014.
Utility Support Structures Segment (23% of 2nd Quarter
Sales)
Steel and concrete structures for the global electric utility
industry.
Sales of $163.0 million were 24%
lower than 2014, due to a decline in North American volumes,
significantly lower steel costs and competitive pricing pressure.
International sales, while not significant, were unchanged from
last year.
In North America, deferred
transmission investment by several of our larger customers, and an
increase of smaller structures in the sales mix led to reduced
sales. Canadian transmission project activity slowed as oil
investment declined.
Utility operating income declined to $10.4 million or 6.4% of segment sales. Excluding
restructuring costs, operating income as a percent of sales was
7.9% compared with 12.4% in 2014. Ongoing operational improvements
were more than offset by lower competitive pricing and volume.
Current restructuring and cost reducing initiatives are expected to
improve profitability.
Coatings Segment (11% of 2nd Quarter Sales)
Global galvanizing, painting and anodizing services.
Global Coatings Segment sales of $76.1
million were 11% lower than last year. Sales declined in
Australia due to reduced mining
and industrial activity. The restructuring actions in Australia focused on consolidation of
facilities, reducing operating costs going forward. In North America both custom and internal
irrigation and utility volumes declined.
Including restructuring costs of $4.8
million, operating income was $7.9
million, or 10.4% of net sales compared to last year's
$15.8 million. Excluding the effect
of restructuring, operating income declined $3.2 million and was 16.6% compared with 18.6% in
2014.
Irrigation Segment (22% of 2nd Quarter Sales)
Agricultural irrigation equipment and related parts and services
worldwide.
Irrigation Segment sales fell 30% to $153.8 million, due to a global decline in farm
income and crop prices. Currency translation had a $12.6 million negative impact on sales.
In North America, declining
sales reflect significantly reduced capital spending by farmers due
to lower farm income. Additionally, a relatively wet spring meant
lower operating time on irrigation equipment, reducing demand for
aftermarket parts. Furthermore, sales of storm damaged equipment
were substantially lower than last year's unusually strong
levels.
International sales declined in several markets, particularly
Brazil, where sales fell below
record 2014 levels. Investment in farm equipment in Brazil slowed, partly due to delays and
uncertainty in government-sponsored financing programs. Currency
translation had a negative impact on international results, in
particular due to a significant devaluation of the Brazilian
currency.
The quality of segment operating income remained solid at
$25.8 million or 16.8% of sales due
to effective cost management. Excluding the effect of
restructuring, operating income was 17.0% compared with 18.9% in
2014.
Outlook:
"We do not expect the challenges we face in the external
environment to abate in the near future," said Mogens C. Bay, Valmont's Chairman and Chief
Executive Officer.
"Reduced global investment in oil and gas development, the
weaker Australian economy, and foreign currency translation will
lead to unfavorable second-half comparisons in the Engineered
Infrastructure Products Segment.
"In the Utility Support Structures Segment, market conditions
are not expected to change in the short-term. However, good
progress has been made on our cost reduction and restructuring
initiatives that will meaningfully reduce our overall cost
structure going into next year.
"In the Coatings Segment, we currently do not expect a
meaningful change in end market demand. We will continue to
press operational improvements and should benefit from the
restructuring efforts to date.
"In the Irrigation Segment, we expect a significant unfavorable
comparison in the third quarter absent the benefit of last year's
storm damage and reduced sales in Brazil.
"Given this outlook, we will continue to intensify our focus on
operational improvements and cost reductions. We are on schedule by
year-end to complete many of the restructuring initiatives we
announced in April. I am confident our restructuring efforts should
lead to improved performance over time."
"Despite the short-term challenges in our businesses, the
long-term drivers of our businesses have not changed, underpinning
our optimism and positive outlook for Valmont," added Mr. Bay.
An audio discussion of Valmont's second 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#: 66198011 or via
the Internet at 8:00 a.m. CDT
July 23, 2015, by pointing browsers
to: https://engage.vevent.com/rt/valmontindustries_ao~072315.
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#: 66198011 beginning July
23, 2015 at 10:00 a.m. CDT
through 12:00 p.m. CDT on
July 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)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter
|
|
Year-to-Date
|
|
|
|
13 Weeks
Ended
|
|
26 Weeks
Ended
|
|
|
|
27-Jun-15
|
|
28-Jun-14
|
|
27-Jun-15
|
|
28-Jun-14
|
Net sales
|
|
|
$ 682,123
|
|
$ 842,599
|
|
$ 1,352,521
|
|
$ 1,594,339
|
Cost of
sales
|
|
|
512,575
|
|
622,122
|
|
1,017,519
|
|
1,166,880
|
Gross profit
|
|
|
169,548
|
|
220,477
|
|
335,002
|
|
427,459
|
Selling, general and
administrative expenses
|
|
|
115,548
|
|
115,701
|
|
223,319
|
|
223,835
|
Operating income
|
|
|
54,000
|
|
104,776
|
|
111,683
|
|
203,624
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(11,232)
|
|
(8,304)
|
|
(22,360)
|
|
(16,501)
|
Interest income
|
|
|
616
|
|
1,577
|
|
1,490
|
|
3,316
|
Other
|
|
|
(28)
|
|
1,903
|
|
988
|
|
(3,909)
|
|
|
|
(10,644)
|
|
(4,824)
|
|
(19,882)
|
|
(17,094)
|
Earnings before income taxes and equity in earnings of nonconsolidated
subsidiaries
|
|
|
43,356
|
|
99,952
|
|
91,801
|
|
186,530
|
Income tax
expense
|
|
|
13,917
|
|
34,070
|
|
30,855
|
|
64,085
|
Earnings before equity in earnings of nonconsolidated subsidiaries
|
|
|
29,439
|
|
65,882
|
|
60,946
|
|
122,445
|
Equity in earnings of
nonconsolidated subsidiaries
|
|
|
-
|
|
(30)
|
|
-
|
|
(30)
|
Net earnings
|
|
|
29,439
|
|
65,852
|
|
60,946
|
|
122,415
|
Less: Earnings
attributable to non-controlling interests
|
|
|
(1,566)
|
|
(1,876)
|
|
(2,334)
|
|
(2,459)
|
Net earnings attributable to Valmont Industries, Inc.
|
|
|
$ 27,873
|
|
$ 63,976
|
|
$ 58,612
|
|
$ 119,956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding (000's) - Basic
|
|
|
23,336
|
|
26,623
|
|
23,602
|
|
26,669
|
Earnings per share -
Basic
|
|
|
$ 1.19
|
|
$ 2.40
|
|
$
2.48
|
|
$
4.50
|
|
|
|
|
|
|
|
|
|
|
Average shares
outstanding (000's) - Diluted
|
|
|
23,450
|
|
26,856
|
|
23,716
|
|
26,903
|
Earnings per share -
Diluted
|
|
|
$ 1.19
|
|
$ 2.38
|
|
$
2.47
|
|
$
4.46
|
|
|
|
|
|
|
|
|
|
|
Cash dividends per
share
|
|
|
$ 0.375
|
|
$ 0.375
|
|
$ 0.750
|
|
$ 0.625
|
VALMONT
INDUSTRIES, INC. AND SUBSIDIARIES
|
SUMMARY OPERATING
RESULTS
|
(Dollars in
thousands)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second
Quarter
|
|
Year-to-Date
|
|
|
|
13 Weeks
Ended
|
|
26 Weeks
Ended
|
|
|
|
27-Jun-15
|
|
28-Jun-14
|
|
27-Jun-15
|
|
28-Jun-14
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
|
|
|
|
|
|
Engineered Infrastructure
Products
|
|
|
$ 261,069
|
|
$ 304,352
|
|
$ 499,462
|
|
$ 532,814
|
Utility Support
Structures
|
|
|
162,929
|
|
213,030
|
|
339,270
|
|
427,757
|
Coatings
|
|
|
76,094
|
|
85,157
|
|
150,454
|
|
167,328
|
Infrastructure products
|
|
|
500,092
|
|
602,539
|
|
989,186
|
|
1,127,899
|
|
|
|
|
|
|
|
|
|
|
Irrigation
|
|
|
153,821
|
|
219,917
|
|
308,297
|
|
432,650
|
Other
|
|
|
50,404
|
|
61,786
|
|
104,262
|
|
120,388
|
Less: Intersegment
sales
|
|
|
(22,194)
|
|
(41,643)
|
|
(49,224)
|
|
(86,598)
|
Total
|
|
|
$ 682,123
|
|
$ 842,599
|
|
$ 1,352,521
|
|
$ 1,594,339
|
|
|
|
|
|
|
|
|
|
|
Operating
Income
|
|
|
|
|
|
|
|
|
|
Engineered Infrastructure
Products
|
|
|
$ 17,424
|
|
$ 28,625
|
|
$ 29,406
|
|
$ 42,334
|
Utility Support
Structures
|
|
|
10,399
|
|
26,375
|
|
25,756
|
|
59,132
|
Coatings
|
|
|
7,862
|
|
15,820
|
|
18,861
|
|
29,706
|
Infrastructure products
|
|
|
35,685
|
|
70,820
|
|
74,023
|
|
131,172
|
|
|
|
|
|
|
|
|
|
|
Irrigation
|
|
|
25,814
|
|
41,473
|
|
50,116
|
|
84,619
|
Other
|
|
|
6,273
|
|
8,343
|
|
12,871
|
|
16,893
|
Corporate
|
|
|
(13,772)
|
|
(15,860)
|
|
(25,327)
|
|
(29,060)
|
Total
|
|
|
$ 54,000
|
|
$ 104,776
|
|
$ 111,683
|
|
$ 203,624
|
|
|
|
|
|
|
|
|
|
|
Valmont has
aggregated its business segments into four reportable segments as
follows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Engineered
Infrastructure Products:This segment consists of the
manufacture of engineered metal 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)
|
|
|
|
|
|
|
|
|
|
|
|
27-Jun-15
|
|
|
|
28-Jun-14
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
$ 317,523
|
|
|
|
$ 455,927
|
Accounts receivable,
net
|
|
|
491,706
|
|
|
|
543,608
|
Inventories
|
|
|
379,897
|
|
|
|
381,943
|
Prepaid expenses
|
|
|
56,653
|
|
|
|
66,916
|
Refundable and deferred
income taxes
|
|
|
44,072
|
|
|
|
71,334
|
Total current assets
|
|
|
1,289,851
|
|
|
|
1,519,728
|
Property, plant and
equipment, net
|
|
|
570,977
|
|
|
|
638,854
|
Goodwill and other
assets
|
|
|
706,564
|
|
|
|
700,022
|
|
|
|
$ 2,567,392
|
|
|
|
$ 2,858,604
|
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
Current installments of
long-term debt
|
|
|
$
1,096
|
|
|
|
$
188
|
Notes payable to
banks
|
|
|
7,914
|
|
|
|
17,485
|
Accounts payable
|
|
|
186,421
|
|
|
|
208,834
|
Accrued expenses
|
|
|
165,138
|
|
|
|
186,996
|
Dividend payable
|
|
|
8,733
|
|
|
|
9,930
|
Total current liabilities
|
|
|
369,302
|
|
|
|
423,433
|
Long-term debt,
excluding current installments
|
|
|
765,272
|
|
|
|
478,498
|
Other long-term
liabilities
|
|
|
292,225
|
|
|
|
341,583
|
Shareholders'
equity
|
|
|
1,140,593
|
|
|
|
1,615,090
|
|
|
|
$ 2,567,392
|
|
|
|
$ 2,858,604
|
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, and (2) 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 June 27,
2015, and June 28, 2014, (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.
|
|
|
|
|
Second Quarter
Ended June 27,
2015
|
|
Diluted
earnings per
share
|
|
Year-to-Date
June 27, 2015
|
|
Diluted
earnings per
share
|
Net earnings
attributable to Valmont Industries, Inc. - as reported
|
|
|
$
27,873
|
|
$
1.19
|
|
$ 58,612
|
|
$
2.47
|
|
|
|
|
|
|
|
|
|
|
Restructuring
expenses - after tax
|
|
|
9,828
|
|
0.42
|
|
10,324
|
|
0.44
|
|
|
|
|
|
|
|
|
|
|
Fair market value
adjustment, Delta EMD - after-tax
|
|
|
167
|
|
0.01
|
|
(433)
|
|
(0.02)
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to Valmont Industries, Inc. - Adjusted
|
|
|
$
37,868
|
|
$
1.61
|
|
$ 68,503
|
|
$
2.89
|
Average shares
outstanding (000's) - Diluted
|
|
|
|
|
23,450
|
|
|
|
23,716
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Second Quarter
Ended June 28,
2014
|
|
Diluted
earnings per
share
|
|
Year-to-Date
June 28, 2014
|
|
Diluted
earnings per
share
|
Net earnings
attributable to Valmont Industries, Inc. - as reported
|
|
|
$
63,976
|
|
$
2.38
|
|
$ 119,956
|
|
$
4.46
|
|
|
|
|
|
|
|
|
|
|
Fair market value
adjustment, Delta EMD - after-tax
|
|
|
115
|
|
0.01
|
|
3,501
|
|
0.13
|
|
|
|
|
|
|
|
|
|
|
Net earnings
attributable to Valmont Industries, Inc. - Adjusted
|
|
|
$
64,091
|
|
$
2.39
|
|
$ 123,457
|
|
4.59
|
Average shares
outstanding (000's) - Diluted
|
|
|
|
|
26,856
|
|
|
|
26,903
|
|
|
|
|
|
|
|
|
|
|
Operating Income
Reconciliation
|
|
|
Second Quarter
Ended June 27,
2015
|
|
|
|
|
|
|
Operating income - as
reported
|
|
|
$
54,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restructuring
expenses - before tax
|
|
|
14,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income
|
|
|
$
68,270
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Sales
|
|
|
682,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income as a
% of Sales
|
|
|
7.9%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income as a % of Sales
|
|
|
10.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Second
Quarter Ended June 27, 2015
|
Segment Operating
Income Reconciliation
|
Engineered
Infrastructure
Products
|
|
Utility
Support
Structures
|
|
Coatings
|
|
Irrigation
|
|
Other/
Corporate
|
|
|
|
|
|
|
|
|
|
|
Operating income - as
reported
|
$
17,424
|
|
$
10,399
|
|
$
7,862
|
|
$ 25,814
|
|
$
(7,499)
|
|
|
|
|
|
|
|
|
|
|
Restructuring
expenses - before tax
|
4,497
|
|
2,455
|
|
4,769
|
|
349
|
|
2,203
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income
|
$
21,921
|
|
$
12,854
|
|
$
12,631
|
|
$ 26,163
|
|
$
(5,296)
|
|
|
|
|
|
|
|
|
|
|
Net
sales
|
261,069
|
|
162,929
|
|
76,094
|
|
153,821
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income as a
% of Sales
|
6.7%
|
|
6.4%
|
|
10.3%
|
|
16.8%
|
|
NM
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating
Income as a % of Sales
|
8.4%
|
|
7.9%
|
|
16.6%
|
|
17.0%
|
|
NM
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/valmont-announces-second-quarter-2015-results-300117415.html
SOURCE Valmont Industries, Inc.