Valmont Industries Inc.’s (VMI) first-quarter 2013 earnings of $2.89 per share outpaced the Zacks Consensus Estimate of $2.50 and exceeded the year-ago earnings of $1.96 by roughly 47% .
Valmont realized a one-time tax benefit of $3.2 million as a result of the divestment of a non-consolidated South African subsidiary. The net effect of the transaction for the quarter was a benefit of 6 cents per share. Two acquisitions, Pure Metal and Locker, added about a penny to earnings per share in the quarter.
Valmont, which is among the prominent steel-pipe and tube companies along with MRC Global Inc. (MRC), Edgen Group Inc. (EDG) and Tenaris SA (TS), posted revenues of $819.6 million in the first quarter, up roughly 14% year over year. It exceeded the Zacks Consensus Estimate of $809 million. Revenues were driven by strong sales growth in both the Utility Support Structures and Irrigation segments, and acquisition-driven sales growth.
Segment Highlights
Revenues from the Utility Support Structures division increased 25.3% year over year to $239.6 million in the first quarter, driven by higher demand in North America. Utility orders shipped in the reported quarter were at improved pricing levels compared to the year-ago quarter. The international utility markets were supported by increased sales in the Asia Pacific region and project demand.
Valmont’s utility plants operated at high production and efficiency levels during the first quarter, and the company continues to leverage its global capacity.
Irrigation segment sales rose 24.7% to $244.7 million in the reported quarter, led by increased North American demand. Demand was supported by high levels of farm income and the impact of last summer's drought in North America. In the international markets, sales increased on the back of strong global crop demand and historically high farm income levels.
The Engineered Infrastructure Products division logged sales of $223.7 million, up 9.7% year over year. Revenues from lighting and traffic products were flat in North America and were lower in Europe due to continued economic weakness in the region.
Revenues from the Coatings segment jumped 7.7% to $89.2 million due to the impact of recent acquisitions. Demand fell in Australia in the beginning of the year, offset by increased internal demand in North America.
Financial Position
Valmont’s cash and cash equivalents stood at $420 million as of Mar 31, 2013, compared with of $339.6 million as of Mar 31, 2012. Total long-term debt declined 0.4% year over year to $472.2 million.
Outlook
Moving ahead, Valmont expects continued strength in its utility business in 2013, manifested by healthy order backlogs. It also expects a strong second quarter for the Irrigation division. The demand for the Irrigation segment for second quarter will depend on growing conditions, commodity prices and the expectations for farm income later in the year.
Valmont expects improved sales and operating comparisons in the engineered infrastructure products segment for the rest of 2013. For the coatings segment, Valmont expects its performance to improve over the balance of the year as it fully integrates the Pure Metal acquisition and sees improved demand in Australia.
Valmont currently carries a Zacks Rank #3 (Hold).
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