Valmont's (VMI) Earnings & Revenues Trail Estimates in Q4

Valmont Industries, Inc. VMI swung to profits of roughly $17.7 million or 80 cents per share in fourth-quarter 2018 from a loss of around $3.6 million or 16 cents a year ago. Adjusted earnings in the quarter were $1.87 per share, up from $1.67 per share a year ago. However, it fell short of the Zacks Consensus Estimate of $1.89.

Net sales in the quarter totaled $697.4 million, down roughly 2% year over year, also lagging the Zacks Consensus Estimate of $709.3 million. Increased sales across Engineered Support Structures and Coatings units were offset by reduced project sales in the company’s Utility segment and international irrigation markets. Sales were also impacted by unfavorable currency translation. 

Valmont Industries, Inc. Price, Consensus and EPS Surprise

 

Valmont Industries, Inc. Price, Consensus and EPS Surprise | Valmont Industries, Inc. Quote

FY18 Results

For 2018, profits were $94.4 million or $4.20 per share, down roughly 19% from $116.2 million or $5.11 per share recorded in 2017.

Net sales for the year edged up roughly 0.4% year over year to $2,757.1 million, aided by gains in Engineered Support Structures and Coatings divisions.

Segment Highlights

Infrastructure-Related

Engineered Support Structures segment sales of $259.7 million for the reported quarter were up around 4% year over year owing to pricing actions across the segment and increased volumes in North America. The company saw higher lighting and traffic product sales In North America. However, it witnessed lower wireless communication volumes in China. Sales also fell in Europe due to lower volumes and unfavorable currency impact.

Utility Support Structures sales fell roughly 4% year over year to $233.3 million, impacted by absence of a sizable project and a less favorable product mix in North America.
 
Coatings segment recorded year-over-year sales growth of 4% to $86.4 million, aided by pricing actions to recover zinc cost increases as well as firm industrial demand.

Agriculture-Related

The Irrigation unit reported global sales of $142.6 million, down around 5% year over year, dented by lower sales in the international market due to unfavorable currency translation and lower project sales in emerging markets. Sales in North America went up 9% year over year to $84.8 million.

Financial Position

Valmont exited 2018 with cash and cash equivalents of $313.2 million, down roughly 36% year over year. Long-term debt at the end of the year was $741,8 million, down around 1%.

The company returned $149 million to shareholders through share repurchases and dividends in 2018.

Outlook

The company expects earnings per share in the range of $8.10-$8.90 for 2019. It also envisions revenue growth of 7-8% year over year in 2019. Capital spending for the year has been forecast in the band of $90-$100 million. Valmont expects sales and earnings growth to be driven by strong market demand.

Per the company, sales growth at the Engineered Support Structures segment is supported by continued government investments in infrastructure development. Utility segment sales are forecast to be driven by strong market demand from ongoing investments in grid hardening and renewable energy sources. Moreover, coatings segment revenues are expected to be driven by global industrial economic growth.

The company also noted that irrigation markets in North America will continue to be muted by low expected net farm income levels and low commodity prices. However, it envisions international irrigation project activity in emerging markets to accelerate throughout 2019. Market environment in Brazil is also forecast to improve.

Price Performance

Valmont’s shares have lost around 8.2% over a year compared with the industry’s fall of 16.6%.


 

Zacks Rank & Stocks to Consider

Valmont currently carries a Zacks Rank #2 (Buy).

Other top-ranked stocks worth considering in the basic materials space include Kirkland Lake Gold Ltd. KL, Israel Chemicals Ltd. ICL and The Mosaic Company MOS.

Kirkland Lake Gold has an expected earnings growth rate of 20.9% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have surged 110% in the past year.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Israel Chemicals has an expected earnings growth rate of 10.8% for the current year and carries a Zacks Rank #2. The company’s shares have rallied around 28% over the past year.  

Mosaic has an expected earnings growth rate of 23.4% for the current year and carries a Zacks Rank #2. Its shares have gained 22% in the past year.

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