Valmont's (VMI) Q1 Earnings And Revenues Beat Estimates

Valmont Industries (NYSE:VMI) posted a profit (on a reported basis) of roughly $39 million or $1.72 per share in first-quarter 2017, up 18.2% year over year from net earnings of around $33 million or $1.45, a year ago.

Barring one-time items, earnings came in at $1.68 per share for the reported quarter, up from $1.49 a year ago. The results topped the Zacks Consensus Estimate of $1.62.

Net sales for the quarter were $637.5 million, up 7% year over year, also beating the Zacks Consensus Estimate of $624 million. Revenues improved across all segments, led by a strong performance in Utility Support Structures Segment.

Segment Review

Broadly, the Omaha, NE-based company classifies its business segments as infrastructure- and agriculture-related.

Infrastructure-Related

Engineered Support Structures: The segment’s sales of $180.6 million for the reported quarter were 2% higher than the prior-year quarter, helped by improved global wireless communication product and intercompany sales. Sales of lighting and traffic products declined modestly in North America. Lighting and traffic structure sales in Europe mainly declined due to lower sales from export. In Asia-Pacific region, the sales of lighting and traffic products were comparable.

Utility Support Structure: Sales rose 21% year over year to $174.6 million, supported by utility reliability investments in the North American transmission grid, interconnecting regional transmission grids, renewable and a favorable sales mix.

Coatings: This segment saw net sales increase year over year by 7% to $73.5 million, supported by price increase to offset higher zinc cost. The sales volume improved as the quarter progressed.

Energy and Mining: Net sales rose 8% to $78 million on gains across major product lines. Offshore wind structures and component sales offset increased on the back of continued development in Europe’s North Sea region. Sales in the non-traditional markets improved, offsetting weak demand for oil and gas exploration markets. Stronger commodity prices and improving construction market supported increased sales in Australia.

Agriculture-Related

Irrigation: The segment reported net sales of $167.2 million, up 6% year over year. Sales in the North American market increased modestly while international sales improved broadly on the back of a stronger Brazil market and favorable currency translations.

Financial Position

Valmont ended first-quarter 2017 with a cash balance of $425.2 million, up roughly 9.7% year over year. Long-term debt at the end of the quarter was $754.5 million, down around 0.3% year over year.

Outlook

According to Valmont's Chairman and CEO, Mogens C. Bay, the company is encouraged by improved demand in certain markets, substantiated by second straight quarter of improved sales. Reconfirming the earnings, sales and cash guidance for the year, the company acknowledged that volatility in the prices of certain raw materials and weak fundamentals in farm economy, could still impact some businesses.

Price Performance

Valmont’s shares rallied around 10.8% over the past three months, outperforming the Zacks categorized Steel-Pipes and Tubes industry’s 9% loss.

Zacks Rank & Key Picks

Valmont currently carries a Zacks Rank #3 (Hold).

Better-ranked companies in the basic materials space include United States Steel Corporation (NYSE:X) , Kronos Worldwide Inc (NYSE:KRO) and Lundin Mining Corp. (OTC:LUNMF) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

U.S. Steel has an expected long-term earnings growth of 8%.

Kronos has an expected long-term earnings growth of 5%.

Lundin has an expected long-term earnings growth of 34.1%.

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