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Valmont's Third Quarter Net Earnings Increase 74% on 30% Increase in Sales

Published on 2004-10-20. Author : SpecialChem

OMAHA, Neb. -- Valmont Industries, Inc., a leading global manufacturer of engineered support structures for infrastructure and mechanized irrigation equipment for agriculture and a provider of coating services and tubular products, reported sales for the third quarter of $262.9 million compared with $202.5 million for the same period of 2003. Third quarter 2004 net earnings were $7.1 million, or 29 cents per diluted share, versus third quarter 2003 net earnings of $4.1 million, or 17 cents per diluted share.

For the first nine months of 2004, sales were $744.8 million versus $610.5 million in 2003. Valmont's nine-month earnings, which include a $6.1 million after-tax charge taken during the second quarter to prepay debt, were $15.4 million, or 63 cents per diluted share, compared with 2003 nine-month earnings of $17.8 million, or 73 cents per diluted share.

Third Quarter 2004 Review:

"Three main factors led to strong profitability gains in the third quarter," said Mogens C. Bay, Valmont's Chairman and Chief Executive Officer. "First, in our Engineered Support Structures Segment, our steel utility product line saw a strong increase in sales and an improvement in pricing and margins from a weak 2003. While our utility sales and margins were better than last year, we believe that further improvements are achievable. Second, the addition of Newmark's sales and profits contributed to our results. The Concrete Support Structures Segment had record third quarter sales. Third, our Tubing Segment had impressive results. Sales were sharply higher and the increased volumes led to excellent factory performance and record quarterly profitability.

The Coatings Segment was weaker due to reduced demand for anodizing and higher workers' compensation costs in California.

Third Quarter Summary -- Infrastructure Markets:

Sales in the Coatings Segment were 12% lower than last year at $22.5 million. Operating income declined 21% to $1.5 million. Galvanizing performance improved as a result of sales gains from growing industrial demand, and higher internal volumes. The volume increases allowed for more efficient operations and better absorption of fixed costs. However, lower anodizing volumes and a change in mix caused profitability declines for the segment. The Company has reduced costs at its anodizing facilities to adjust for the lower sales. Profitability was also impacted by increasing workers' compensation costs in California. Recent reforms in the workers' compensation program in that state should moderate these issues going forward.

Fourth Quarter Outlook:

Commenting on the outlook for the fourth quarter, Mr. Bay said, "We believe the fourth quarter will show positive sales and earnings comparisons, although not to the degree of the third quarter improvement. Steel prices appear to be stabilizing. Capital spending in the utility markets is improving. Tubing demand is robust. While farm income remains strong, weakening crop prices, high energy costs, and significant price increases lead us to have some concern over the short-term outlook. The strong positive trends in most of our businesses should outweigh any decline in irrigation. We are expecting positive trends in our performance to continue into 2005."

Valmont is the global leader in designing and manufacturing poles, towers and structures for lighting and traffic, wireless communication and utility markets, 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.

Source: Valmont Industries, Inc.


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