Exhibit 99.1

 

News Release

For Immediate Release

 

Contact:

Renee Campbell

April 18, 2018

 

402-963-1057

 

 

Jeff Laudin

 

 

402-963-1158

 

 

Valmont Reports First Quarter 2018 Results

 

Omaha, NE - Valmont Industries, Inc. (NYSE: VMI), a leading global provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, today reported first quarter 2018 results.

 

 

 

 

GAAP

 

Adjusted(1)

 

 

 

3/31/2018

 

4/1/2017

 

 

 

3/31/2018

 

4/1/2017

 

 

 

 

 

Q1 2018

 

Q1 2017

 

vs. Q1 2017

 

Q1 2018

 

Q1 2017

 

vs. Q1 2017

 

Revenue

 

$

698,684

 

$

637,473

 

up 9.6%

 

$

698,684

 

$

637,473

 

up 9.6%

 

Operating Income

 

$

63,960

 

$

64,656

 

down 1.1%

 

$

68,360

 

$

64,656

 

up 5.7%

 

Operating Income as a % of Net Sales

 

9.2

%

10.1

%

 

 

9.8

%

10.1

%

 

 

Net Earnings

 

$

39,281

 

$

38,979

 

up 0.8%

 

$

42,606

 

$

38,979

 

up 9.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Earnings Per Share

 

$

1.72

 

$

1.72

 

unch.

 

$

1.87

 

$

1.72

 

up 8.7%

 

Average Shares Outstanding

 

22,796

 

22,660

 

 

 

22,796

 

22,660

 

 

 

 

First Quarter Highlights:

 

·                  Revenues increased 9.6% to $698.7 million, reflecting higher pricing to recover inflation, volume increases in all segments except Utility, and favorable foreign currency translation effects

 

·                  Deployed capital for share repurchases, two acquisitions in the Irrigation segment, and investments in existing factories in the U.S., Poland, and the United Arab Emirates

 

·                  The sale of Donhad Pty. Ltd, the mining consumables business in Australia, was approved by Australian regulatory authorities, with expected closing by April 30

 

- more -

 


(1)         Please see Reg G reconciliation of GAAP operating income, net earnings and EPS to Adjusted figures at end of document.

 



 

·                  Incurred pre-tax restructuring expense of $4.4 million during the quarter, predominately cash, equivalent to $0.15 per share, after-tax

 

·                  Increasing 2018 annual guidance for GAAP diluted EPS to a range of approximately $7.70-$7.80, and adjusted diluted EPS to a range of approximately $8.00-$8.10, to reflect the above-mentioned acquisitions, share repurchase effects, and approximately $10.0 million of restructuring charges

 

“Increased revenue across all reportable segments led to a good start to the year for Valmont, including double-digit growth in the Coatings and Irrigation segments,” said Stephen G. Kaniewski, President and Chief Executive Officer. “One of our key strategies is pursuing international growth, which resulted in revenue gains across several regions.”

 

Added Mr. Kaniewski, “In the Irrigation, Utility and Coatings segments, we were successful in recovering most raw material cost increases. Longer backlogs with fixed-price contracts in the Engineered Support Structures segment, hampered our ability to fully recover raw material cost increases during the quarter. The slight decrease in overall operating income for the Company is mostly attributable to restructuring expenses, and the lack of profitability in the grinding media business.”

 

First Quarter Segment Review

 

Infrastructure

 

Engineered Support Structures Segment (32% of Sales)

 

Poles, towers and components for the global lighting, traffic and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products

 

Sales of $225.0 million were 9.8% higher than last year, led by increased highway safety product sales in Australia, improved structures sales across North America and Europe, and favorable currency translation effects.

 

Lighting sales improved in North America, driven by increased volumes in both transportation and commercial markets. Ongoing infrastructure investments by the Australian and Indian governments to promote safer roads resulted in increased highway safety product sales in those regions. In Europe, lighting sales also grew, aided by economic recovery across the region that began mid-2017.

 

Sales of North American wireless communication products and components were higher compared to last year, due to widespread demand from carriers and tower companies. In the Asia Pacific region, sales were lower as a result of reduced demand in the China market. Access Systems sales were also lower, due to project sales that did not repeat.

 


(1)         Please see Reg G reconciliation of GAAP operating income, net earnings and EPS to Adjusted figures at end of document.

 



 

Operating income was $6.9 million or 3.1% of sales ($10.6 million, or 4.7% adjusted(1)) compared to $9.5 million, or 4.6% of sales in 2017. Price increases implemented during the quarter did not fully recover cost increases, and this is expected to carry over into to the second quarter. It is anticipated, however, that these pricing actions will lead to improved profitability in the second half of the year.

 

Utility Support Structures Segment (30% of Sales)

 

Steel and concrete structures for global utility transmission, distribution and generation applications, wind and offshore structures, and inspection services

 

Sales of $209.9 million increased 4.8% over last year, supported by utility investments in the North American grid to improve reliability and connectivity, and increased demand for renewable projects. Pricing to reflect higher steel costs led to the sales growth.  International utility sales benefited from shipments of highly-engineered PyraMAXTM structures.

 

Operating income decreased slightly to $23.4 million or 11.1% of sales ($24.1 million or 11.5% adjusted(1)), compared to $24.2 million or 12.1% in 2017, due to a less favorable product mix, partially offset by improved operational leverage.

 

Coatings Segment (12% of Sales)

 

Global galvanizing, painting and anodizing services to preserve and protect metal products

 

Sales of $84.9 million were 15.5% higher than last year, reflecting improved external market demand from economic growth across all regions. Sales to other Valmont segments were also higher.

 

Operating income was $11.9 million, or 14.0% of sales, compared to $9.4 million, or 12.8% of sales in 2017. Higher volumes, price recovery and improved operating leverage contributed to favorable results.

 

Agriculture

 

Irrigation Segment (27% of Sales)

 

Agricultural irrigation equipment, parts, services and tubular products, water management solutions, and technology for precision agriculture

 

Global revenue of $188.0 million was 12.4% above last year, led by robust international sales and significant project business. North American sales approximated first quarter 2017. Continued low net farm income levels and a late start to the planting season muted demand; however, the continued adoption of precision irrigation technology solutions supported sales.

 

Operating income was higher at $33.9 million, or 18.0% of sales, compared to $30.3 million, or 18.1% of sales in 2017. Segment profitability increased in line with sales growth.

 


(1)         Please see Reg G reconciliation of GAAP operating income, net earnings and EPS to Adjusted figures at end of document.

 



 

During the quarter, the Company acquired a majority stake in Torrent Engineering and Equipment based in Warsaw, Indiana. Torrent is a global designer and integrator of water systems and pump stations for agricultural and industrial applications, with annual sales of approximately $9.0 million. The Company also acquired the remaining outstanding shares of its irrigation subsidiary in Uberaba, Brazil, increasing its overall stake from 90% to 100%.

 

Other (3% of Sales)

 

Manufacture of forged steel grinding media for the mining industry

 

Sales in grinding media were $18.4 million compared to $19.6 million in 2017, a decline of 6.1%. First quarter operating loss was $0.6 million compared to operating profit of $2.1 million in 2017. The sale of the grinding media business is expected to close by April 30.

 

2018 Restructuring Plan

 

As announced in February, the Company initiated a restructuring plan at the beginning of the year. During the quarter, restructuring actions taken included the consolidation and closure of certain facilities, and realignment of back-office and management functions. As the Company analyzes its optimal footprint and cost structure, further actions may be considered.

 

2018 Outlook:

 

“Signs of stronger economic growth in many regions should contribute to favorable sales comparisons this year across most of our businesses,” Mr. Kaniewski said. “While continued weakness in the U.S. farm economy, and the uncertainty surrounding tariffs could impact customer demand, our diversified, global sales and manufacturing presence should help mitigate these impacts. Our teams are executing on the longer-term strategies communicated at our Investor Day, and we continue to pursue disciplined acquisitions in our core businesses. We have increased our EPS guidance to reflect our capital allocation activities during the quarter, and are on target to meet our annual and long-term financial goals.”

 

An audio discussion of Valmont’s first quarter 2018 results will be available live by telephone by dialing 1-877-407-6184 or 1-201-389-0877 (no Conference ID needed), or via webcast, at 8:00 a.m. CDT on April 19, 2018, by pointing browsers to this link:  Valmont Industries Q1 2018 Earnings Conference Call. A replay is available by accessing the above link, or by telephone at 1-877-660-6853 or 1-201-612-7415, and enter Conference ID 13678313, beginning April 19, 2018 at 11:00 a.m. CDT through 10:59 p.m. CDT on April 26, 2018. The Company’s slide presentation for the call will be simultaneously available on the Investor Relations page at www.valmont.com, along with the Investor Day presentation.

 


(1)         Please see Reg G reconciliation of GAAP operating income, net earnings and EPS to Adjusted figures at end of document.

 



 

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 irrigation equipment and services 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.

 


(1)         Please see Reg G reconciliation of GAAP operating income, net earnings and EPS to Adjusted figures at end of document.

 



 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Dollars in thousands, except per share amounts)

(unaudited)

 

 

 

First Quarter

 

 

 

13 Weeks Ended

 

 

 

31-Mar-18

 

1-Apr-17

 

Net sales

 

$

698,684

 

$

637,473

 

Cost of sales

 

529,444

 

472,868

 

Gross profit

 

169,240

 

164,605

 

Selling, general and administrative expenses

 

105,280

 

99,949

 

Operating income

 

63,960

 

64,656

 

Other income (expense)

 

 

 

 

 

Interest expense

 

(11,074

)

(11,304

)

Interest income

 

1,267

 

927

 

Gain (loss) on investments (unrealized)

 

(101

)

1,237

 

Other

 

(1,040

)

(192

)

 

 

(10,948

)

(9,332

)

Earnings before income taxes

 

53,012

 

55,324

 

 

 

 

 

 

 

Income tax expense

 

12,532

 

15,363

 

Net earnings

 

40,480

 

39,961

 

Less: Earnings attributable to non-controlling interests

 

(1,199

)

(982

)

Net earnings attributable to Valmont Industries, Inc.

 

$

39,281

 

$

38,979

 

 

 

 

 

 

 

 

 

 

 

 

 

Average shares outstanding (000’s) - Basic

 

22,609

 

22,472

 

Earnings per share - Basic

 

$

1.74

 

$

1.73

 

 

 

 

 

 

 

Average shares outstanding (000’s) - Diluted

 

22,796

 

22,660

 

Earnings per share - Diluted

 

$

1.72

 

$

1.72

 

 

 

 

 

 

 

Cash dividends per share

 

$

0.375

 

$

0.375

 

 



 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

SUMMARY OPERATING RESULTS

(Dollars in thousands)

(unaudited)

 

 

 

First Quarter

 

 

 

13 Weeks Ended

 

 

 

31-Mar-18

 

1-Apr-17

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

Engineered Support Structures

 

$

224,954

 

$

204,949

 

Utility Support Structures

 

209,862

 

200,265

 

Coatings

 

84,947

 

73,468

 

Infrastructure products

 

519,763

 

478,682

 

 

 

 

 

 

 

Irrigation

 

187,953

 

167,224

 

Other

 

18,399

 

19,594

 

Less: Intersegment sales

 

(27,431

)

(28,027

)

Total

 

$

698,684

 

$

637,473

 

 

 

 

 

 

 

Operating Income

 

 

 

 

 

Engineered Support Structures

 

$

6,947

 

$

9,464

 

Utility Support Structures

 

23,367

 

24,207

 

Coatings

 

11,867

 

9,406

 

Infrastructure products

 

42,181

 

43,077

 

 

 

 

 

 

 

Irrigation

 

33,887

 

30,291

 

Other

 

(579

)

2,086

 

Adjustment to LIFO inventory valuation method

 

(1,081

)

(779

)

Corporate

 

(10,448

)

(10,019

)

Total

 

$

63,960

 

$

64,656

 

 

Valmont has aggregated its business segments into four reportable segments as follows:

 

Engineered Support Structures: This segment consists of the manufacture of engineered metal and composite pole, towers, and components for global lighting, traffic, and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products.

 

Utility Support Structures: This segment consists of the manufacture of engineered steel and concrete structures for global utility transmission, distribution, and generation applications, wind and offshore structures outside of North America, and inspection services.

 

Coatings: This segment consists of global galvanizing, painting and anodizing services.

 

Irrigation: This segment consists of the global manufacture of agricultural irrigation equipment, parts and services, tubular products, water management solutions, and technology for precision agriculture.

 

In addition to these four reportable segments, the Company had other businesses and activities that individually are not more than 10% of consolidated sales, operating income or assets. This includes the manufacture of forged steel grinding media for the mining industry and is reported in the “Other” category.

 



 

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands)

(unaudited)

 

 

 

31-Mar-18

 

1-Apr-17

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

479,663

 

$

425,216

 

Accounts receivable, net

 

467,010

 

455,044

 

Inventories

 

370,005

 

389,156

 

Prepaid expenses and other

 

127,251

 

54,532

 

Assets held for sale

 

72,665

 

 

Refundable and deferred income taxes

 

6,749

 

7,325

 

Total current assets

 

1,523,343

 

1,331,273

 

Property, plant and equipment, net

 

503,712

 

519,658

 

Goodwill and other assets

 

591,009

 

615,957

 

 

 

$

2,618,064

 

$

2,466,888

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Current installments of long-term debt

 

$

951

 

$

860

 

Notes payable to banks

 

377

 

957

 

Accounts payable

 

190,902

 

194,525

 

Accrued expenses

 

160,579

 

177,894

 

Liabilities held for sale

 

12,960

 

 

Dividend payable

 

8,493

 

8,468

 

Total current liabilities

 

374,262

 

382,704

 

Long-term debt, excluding current installments

 

753,647

 

754,523

 

Other long-term liabilities

 

304,799

 

288,381

 

Shareholders’ equity

 

1,185,356

 

1,041,280

 

 

 

$

2,618,064

 

$

2,466,888

 

 

 

 

13 Weeks Ended

 

13 Weeks Ended

 

 

 

31-Mar-18

 

1-Apr-17

 

Cash flows from operating activities

 

 

 

 

 

Net Earnings

 

$

40,480

 

$

39,961

 

Depreciation and amortization

 

21,178

 

20,827

 

Contribution to defined benefit pension plan

 

(731

)

(25,379

)

Change in working capital

 

(36,255

)

(29,287

)

Other

 

8,376

 

17,293

 

Net cash flows from operating activities

 

$

33,048

 

$

23,415

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

Purchase of property, plant, and equipment

 

(16,248

)

(14,168

)

Acquisition, net of cash acquired

 

(4,800

)

 

Other

 

(1,931

)

(1,413

)

Net cash flows from investing activities

 

(22,979

)

(15,581

)

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

Net payments on short and long-term agreements

 

(30

)

(17

)

Purchase of treasury shares

 

(14,790

)

 

Dividends paid

 

(8,510

)

(8,445

)

Purchase of noncontrolling interest

 

(5,510

)

 

Other

 

187

 

5,602

 

Net cash flows from financing activities

 

(28,653

)

(2,860

)

Effect of exchange rates on cash and cash equivalents

 

5,442

 

7,726

 

Net change in cash and cash equivalents

 

(13,142

)

12,700

 

Cash, cash equivalents, & restricted cash - beginning of year

 

492,805

 

412,516

 

Cash, cash equivalents, & restricted cash - end of period

 

$

479,663

 

$

425,216

 

 



 

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, (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.

 

 

 

First Quarter
Ended March
31, 2018

 

Diluted
earnings per
share

 

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

 

$

39,281

 

$

1.72

 

 

 

 

 

 

 

Restructuring expenses - pre-tax

 

4,400

 

0.19

 

 

 

 

 

 

 

Tax effect of restructuring expense *

 

(1,075

)

(0.05

)

 

 

 

 

 

 

Net earnings attributable to Valmont Industries, Inc. - Adjusted

 

$

42,606

 

$

1.87

 

Average shares outstanding (000’s) - Diluted

 

 

 

22,796

 

 


* The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction,

 

Operating Income Reconciliation

 

First Quarter
Ended March
31, 2018

 

 

 

 

 

 

Operating income - as reported

 

$

63,960

 

 

 

 

 

Restructuring expenses

 

4,400

 

 

 

 

 

Adjusted Operating Income

 

$

68,360

 

 

 

 

 

Net Sales

 

698,684

 

 

 

 

 

Operating Income as a % of Sales

 

9.2

%

 

 

 

 

Adjusted Operating Income as a % of Sales

 

9.8

%

 

 

 

For the First Quarter Ended March 31, 2018

 

Segment Operating Income Reconciliation

 

Engineered
Infrastructure
Products

 

Utility Support
Structures

 

Coatings

 

Irrigation

 

Other/
Corporate

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income - as reported

 

$

6,947

 

$

23,367

 

$

11,867

 

$

33,887

 

$

(12,108

)

 

 

 

 

 

 

 

 

 

 

 

 

Restructuring expenses

 

3,628

 

772

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income

 

$

10,575

 

$

24,139

 

$

11,867

 

$

33,887

 

$

(12,108

)

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

224,954

 

209,862

 

84,947

 

187,953

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Income as a % of Sales

 

3.1

%

11.1

%

14.0

%

18.0

%

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Operating Income as a % of Sales

 

4.7

%

11.5

%

14.0

%

18.0

%

NM

 

 

END

 


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