Valmont Industries (VMI) posted earnings of $2.04 per share in the fourth quarter of 2013, down 16% from $2.43 in the year-ago quarter. Its shares fell as much as 6.9% in the trading session following the announcement to reflect the lower profit and downbeat outlook.
Barring charges related to asset impairment and deconsolidation of Delta EMD, earnings came in at $2.66 per share in the reported quarter, exceeding the Zacks Consensus Estimate by a penny.
For full-year 2013, earnings (excluding Delta EMD impairment and deconsolidation charges) came in at $10.97 per share. After including charges, earnings came in at $10.35 per share compared with $8.75 in 2012.
Valmont, which is among the prominent steel-pipe and tube companies along with MRC Global Inc. (MRC), Mueller Water Products, Inc. (MWA) and Tenaris SA (TS), registered revenues of $827.9 million in the quarter, up roughly 1.6% year over year. The increase was mainly driven by gains in the Engineered Infrastructure Products Segment. However, sales lagged the Zacks Consensus Estimate of $851 million.
For full-year 2013, revenues increased 9.1% year over year to $3,304.2 million.
Segment Highlights
Revenues from the Utility Support Structures segment rose 5% year over year to $264.7 million in the reported quarter, backed by continued investment in the North American transmission grid. Sales, however, fell in the international utility markets. Valmont continues to add capacity in anticipation of higher future demand. The segment sales reached record fourth quarter levels.
Irrigation segment revenues declined 6% year over year to $192.2 million in the quarter. Shorter selling season along with lower crop commodity prices led to lower orders and sales. Sales increased in international markets. Valmont expects long-term demand to be driven by the growing food needs of a rising global population and improving diets.
Revenues from the Engineered Infrastructure Products division went up 8% year over year to $267.2 million. Sales were driven by the Locker Group acquisition, and higher sales of lighting and traffic products in North America. Contributions from Locker more than offset the impact of a weaker Australian currency and economy on engineered access system sales.
Coatings segment sales rose 3% to $85.6 million. Contributions from Canadian galvanizer acquisition of Pure Metal more than offset the impact of Australia's weaker currency and economy on sales. With the acquisition, the company has benefited from the increased geographic diversification and exposure to strong Canadian economy.
Financials
Valmont exited the quarter with cash and cash equivalents of $613.7 million, up 48% year over year. Long-term debt fell 0.4% year over year to $470.9 million.
Outlook
Looking ahead, Valmont expects its first quarter of 2014 to be challenging compared with the year-ago quarter. The company forecasts its irrigation results to decline in the first quarter.
In the utility business, the company expects flat first quarter revenues due to reduction of number of projects in international markets. Severe weather has disrupted production and shipping in some of its facilities. In addition, pricing pressure is expected to lead to reduced utility profitability in the first quarter.
The company expects its first quarter earnings to be down roughly 25%. It forecasts full-year 2014 earnings to be modestly below adjusted diluted earnings of $10.97 per share in the prior year.
Valmont currently carries a Zacks Rank #4 (Sell).
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