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Valmont Announces Fourth Quarter and Fiscal Year 2012 Results
Submitted by admin on 2/12/2013 @ 2:30 PM
Companies mentioned in this article:
Valmont Industries, Inc.
OMAHA, Neb., Feb. 12, 2013 /PRNewswire/ -- Valmont Industries, Inc. (NYSE: VMI), a leading global provider of engineered products and services for infrastructure and mechanized irrigation equipment for agriculture, reported fourth quarter sales of $815.0 million compared with $752.7 million for the same period of 2011. Fourth quarter 2012 operating income was $111.7 million versus $77.4 million in 2011. When comparing this year's $2.43 fourth quarter diluted earnings per share to last year's reported fourth quarter diluted earnings per share of $4.33, it should be noted that included in last year's fourth quarter was $2.50 per share of favorable one-time items recognized as a result of a reorganization of the Company's legal structure. Excluding those favorable one-time items, fourth quarter 2011 diluted earnings per share were $1.83.
For fiscal 2012, sales were $3.0 billion versus $2.7 billion in 2011. Operating income for fiscal 2012 was $382.3 million versus $263.3 million in 2011. Valmont's fiscal year net earnings were $234.1 million, or $8.75 per diluted share compared with 2011 fiscal year earnings of $228.3 million, or $8.60 per diluted share, which included the aforementioned $2.50 per share of favorable one-time items in the fourth quarter of 2011.
Fourth Quarter Review:
"The main drivers of record fourth quarter operating results were the substantial sales increases in the Utility Support Structures and Irrigation Segments," said Mogens C. Bay, Valmont's Chairman and Chief Executive Officer. "Increased sales of wireless communication products and intercompany sales of utility products contributed to improved results in the Engineered Infrastructure Products Segment. In the Coatings Segment, a decline in Australian demand was the main reason for lower sales. Those businesses reported in "Other" had improved operating margins despite lower sales.
"Increased volumes in both the Utility Support Structures and Irrigation Segments allowed us to realize significant fixed cost leverage during the quarter. This led to a 13.7% operating margin for the quarter, compared with last year's 10.3%."
Fourth Quarter Segment Review:
Utility Support Structures Segment (30% of 4th Quarter Sales)
Steel and concrete structures for the global electric utility industry.
Sales of $252.6 million were 25% higher than 2011, mostly as a result of increased large-project demand from North American utility customers. Electric utilities continued to invest in structures for the transmission grid to improve reliability, add physical capacity and increase the interconnectivity of regional transmission grids. International utility sales increased, primarily due to higher export sales from China.
Valmont believes the transmission infrastructure needed to meet the objectives of improved reliability and interconnectivity will drive a multi-year period of high demand for utility structures. Consequently, in addition to capacity expansions announced earlier in the year, the Company made an additional investment in manufacturing capacity by purchasing a facility in Columbus, Nebraska during the fourth quarter.
Operating income rose 60% to $47.1 million, which represents 18.7% of sales. The increase in operating income was due to an improving mix of orders and the positive impact of volume and SG&A leverage.
Irrigation Segment (24% of 4th Quarter Sales)
Center pivot and linear move mechanized irrigation equipment and parts for agriculture in global markets.
Sales rose 13% to $203.4 million, with gains in North America more than offsetting a decline in international sales. While sales increased in most regions, total international sales declined due to a reduction in project business in North Africa.
North American demand was supported by a couple of factors. Historically high crop prices resulted in high levels of farm income. In addition, last summer's drought impacted many growing regions of the U.S. Following periods of drought, in addition to the inherent benefits of mechanized irrigation, the economic benefits of irrigation during a drought becomes an additional driver. As a result, a large number of growers are seeking the benefits of irrigation. This led to record order rates and greatly improved sales during the fourth quarter.
Long-term drivers remain strong for the irrigation market. World population growth and dietary improvement create a long-term increasing demand for food. Water availability concerns will pressure agriculture to reduce its water consumption over time. Valmont's mechanized irrigation equipment helps to provide a solution to this global dilemma by improving farm productivity and using water efficiently.
Operating income grew 49% to $40.5 million and was 19.9% of segment sales. The improvement in operating margin was largely the result of operating leverage, a favorable sales mix and good factory performance.
Engineered Infrastructure Products Segment (27% of 4th Quarter Sales)
Lighting, traffic and highway safety products, wireless communication structures and components, and industrial gratings and access systems worldwide.
Fourth quarter sales were $229.1 million, a 4% increase over 2011. In North America, sales of lighting and traffic products were flat and the market environment was little changed. Intercompany sales to the utility division were higher than last year.
Sales of lighting and traffic structures in Europe were lower due to continued economic weakness and government austerity programs. Lower sales comparisons also reflect the exit in 2011 from certain geographic operations.
In the Asia-Pacific region, sales rose in all product lines, particularly in the Webforge engineered access systems business.
Sales of wireless communication structures and components were higher in North American markets and lower in China.
Operating income was $13.1 million, or 5.7% of segment sales. Excluding the impact of one-time charges to reduce the carrying value of certain trade names in the fourth quarter of 2011, fourth quarter segment operating income in 2012 was slightly improved over 2011. The improvement was mostly due to increased performance in wireless communication in North America and broad improvement in the Asia-Pacific businesses, which more than offset decreased profitability in the global lighting businesses.
Coatings Segment (10% of 4th Quarter Sales)
Hot-dip galvanizing, and other coatings to protect against corrosion of steel and aluminum in global markets.
Sales of $83.2 million were 7% lower than last year. Most of the sales decline was attributable to reduced demand in Australian markets reflecting a slowdown in construction in eastern Australia. In North America, sales were comparable to last year with increased internal irrigation and utility demand offsetting lower custom demand.
During the fourth quarter, the Company acquired Pure Metal Galvanizing in Ontario, Canada. This acquisition expands Valmont's North American footprint and complements our global portfolio. The acquisition had minimal impact on fourth quarter results. Integration activities are proceeding on schedule.
Operating income declined 10% to $17.1 million, or 20.5% of segment sales due to the reduction in Australian volumes.
2012 Fiscal Year Review:
"Very strong utility and irrigation market demand were the main drivers of record results in 2012," said Mr. Bay. "Looking at results by segment, the Utility Support Structures Segment benefited from significantly increased investments by utility companies in the transmission grid. In the Irrigation Segment, increased demand for feed-grains, strong crop prices and historically high farm incomes led to record demand for mechanized irrigation equipment. In the second half of the year, widespread drought in North America accelerated demand. Sales in international irrigation markets were modestly higher for the year. In the Engineered Infrastructure Products Segment, sales increases in the North American and Asia-Pacific regions more than offset lower sales in Europe. The most significant contributor to increased profitability for the segment was improved performance in the North American wireless communication business. Our coatings business operated well, generating increased profitability on slightly lower sales.
"For the year, operating income as a percent of sales for the Company improved substantially from 9.9% to 12.6%."
Subsequent Event:
On February 5, 2013 the Company acquired privately-held Locker Group Holdings Pty Ltd., a market leader in Australia and Asia for the manufacture of perforated and expanded metal for the non-residential market, industrial flooring and handrails for the access systems market, and screening media for applications in the industrial and mining sectors.
2013 Outlook:
"We expect another record performance in 2013," Mr. Bay said, "The current demand for Utility Support Structures is strong as reflected by our record backlogs at year end. We expect a solid first-half in the Irrigation Segment, which also had record year-end backlogs. In the Coatings Segment we expect solid demand and continued good performance. In the Engineered Infrastructure Products Segment, despite continued restraint in government spending we still expect a modest sales increase and continued profitability gains. While it is still early in the year, we currently expect low teens revenue growth and high teens earnings growth for 2013."
An audio discussion of Valmont's fourth 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#: 98703081 or via the Internet at 8:00 a.m. CST February 13, 2013, 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 1-855-859-2056 or 404-537-3406, and enter the Conference ID#: 98703081 beginning February 13, 2013 at 10:00 a.m. CST through 12:00 p.m. CST on February 20, 2013.
Valmont a 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.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
(unaudited)
Fourth Quarter Year-to-Date
13 Weeks Ended 52 Weeks Ended
--------------
29-Dec-12 31-Dec-11 29-Dec-12 31-Dec-11
--------- --------- --------- ---------
Net sales $815,037 $752,730 $3,029,541 $2,661,480
Cost of sales 590,692 557,785 2,227,085 1,994,670
------- ------- --------- ---------
Gross profit 224,345 194,945 802,456 666,810
Selling, general and
administrative expenses 112,601 117,588 420,160 403,500
------- ------- ------- -------
Operating income 111,744 77,357 382,296 263,310
------- ------ ------- -------
Other income (expense):
Interest expense (7,968) (9,460) (31,625) (36,175)
Interest income 2,191 2,346 8,272 9,265
Other (560) (1,867) 347 (2,643)
---- ------ --- ------
(6,337) (8,981) (23,006) (29,553)
------ ------ ------- -------
Earnings before income
taxes and equity in
earnings of
nonconsolidated
subsidiaries 105,407 68,376 359,290 233,757
Income tax expense 39,497 (46,022) 126,502 4,590
------ ------- ------- -----
Earnings before equity
in earnings of
nonconsolidated
subsidiaries 65,910 114,398 232,788 229,167
Equity in earnings of
nonconsolidated
subsidiaries 817 3,550 6,128 8,059
--- ----- ----- -----
Net earnings 66,727 117,948 238,916 237,226
Less: Earnings
attributable to non-
controlling interests (1,691) (3,217) (4,844) (8,918)
------ ------ ------ ------
Net earnings
attributable to Valmont
Industries, Inc. $65,036 $114,731 $234,072 $228,308
======= ======== ======== ========
Average shares
outstanding (000's) -
Basic 26,517 26,361 26,471 26,329
====== ====== ====== ======
Earnings per share -
Basic $2.45 $4.35 $8.84 $8.67
===== ===== ===== =====
Average shares
outstanding (000's) -
Diluted 26,812 26,499 26,764 26,550
====== ====== ====== ======
Earnings per share -
Diluted $2.43 $4.33 $8.75 $8.60
===== ===== ===== =====
Cash dividends per share $0.225 $0.180 $0.855 $0.705
====== ====== ====== ======
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(unaudited)
Fourth Quarter Year-to-Date
13 Weeks Ended 52 Weeks Ended
-------------- --------------
29-Dec-12 31-Dec-11 29-Dec-12 31-Dec-11
--------- --------- --------- ---------
Sales
Engineered Infrastructure Products $229,115 $220,003 $882,106 $817,593
Utility Support Structures 252,556 202,848 873,520 624,870
Coatings 83,155 88,905 334,552 327,322
Irrigation 203,427 180,640 750,641 666,007
Other 82,980 85,009 328,737 331,986
------ ------ ------- -------
Total 851,233 777,405 3,169,556 2,767,778
Intersegment sales
Engineered Infrastructure Products (11,731) (6,961) (48,793) (24,996)
Utility Support Structures (785) 2,634 (3,857) (4,105)
Coatings (14,216) (12,251) (52,478) (46,534)
Irrigation 449 (103) (49) (111)
Other (9,913) (7,994) (34,838) (30,552)
------ ------ ------- -------
Total (36,196) (24,675) (140,015) (106,298)
Net sales
Engineered Infrastructure Products 217,384 213,042 833,313 792,597
Utility Support Structures 251,771 205,482 869,663 620,765
Coatings 68,939 76,654 282,074 280,788
Irrigation 203,876 180,537 750,592 665,896
Other 73,067 77,015 293,899 301,434
------ ------ ------- -------
Total $815,037 $752,730 $3,029,541 $2,661,480
======== ======== ========== ==========
Operating Income
Engineered Infrastructure Products $13,106 $9,846 $54,013 $40,753
Utility Support Structures 47,124 29,429 129,025 70,643
Coatings 17,070 19,056 71,641 58,656
Irrigation 40,450 27,136 143,605 107,759
Other 13,162 12,769 46,575 45,670
Corporate (19,168) (20,879) (62,563) (60,171)
------- ------- ------- -------
Total $111,744 $77,357 $382,296 $263,310
======== ======= ======== ========
The backlog of orders for the principal products manufactured and marketed was $903 million at the end of the 2012 fiscal year and $703 million at the end of the 2011 fiscal year. We anticipate that most of the backlog of
orders will be filled during fiscal year 2013. At year-end, the segments with backlog were as follows (dollar amounts in millions):
29-Dec-12 31-Dec-11
--------- ---------
Engineered
Infrastructure
Products $212 $208
Utility Support
Structures 434 383
Irrigation 231 97
Other 26 15
$903 $703
==== ====
The company has four reportable segments based on its management structure.
Engineered Infrastructure Products:This segment consists of the manufacture of engineered metal structures and components for global lighting and traffic, wireless communication, 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, electrolytic manganese dioxide and industrial fasteners, are reported in the "Other" category.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
29-Dec-12 31-Dec-11
--------- ---------
ASSETS
------
Current assets:
Cash and cash equivalents $414,129 $362,894
Accounts receivable, net 515,902 426,683
Inventories 412,384 393,782
Prepaid expenses 25,144 25,765
Refundable and deferred
income taxes 58,381 43,819
------ ------
Total current assets 1,425,940 1,252,943
Property, plant and
equipment, net 512,612 454,877
Goodwill and other assets 629,999 598,256
------- -------
$2,568,551 $2,306,076
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current installments of
long-term debt $224 $235
Notes payable to banks 13,375 11,403
Accounts payable 212,424 216,729
Accrued expenses 180,408 157,128
Income taxes payable - 17,808
Dividend payable 6,002 4,767
----- -----
Total current liabilities 412,433 408,070
Long-term debt, excluding
current installments 472,593 474,415
Other long-term liabilities 276,515 225,680
Shareholders' equity 1,407,010 1,197,911
--------- ---------
$2,568,551 $2,306,076
========== ==========
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)
Non-recurring items listed below relate to: a one-time tax benefit from a legal reorganization and the net effect of other significant 2011 non-recurring items.
Quarter ended December 31, 2011 Diluted earnings per share
------------------------------- --------------------------
Net earnings attributable to Valmont Industries, Inc. - as reported $114,731 $4.33
Tax benefit from legal reorganization (66,026) -2.49
Other non-recurring items - net of tax (215) -0.01
---- -----
Net earnings attributable to Valmont Industries, Inc. - Adjusted $48,490 $1.83
======= =====
SOURCE Valmont Industries, Inc.