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Valmont (VMI) Earnings & Revenues Surpass Estimates in Q1

Zacks Equity Research
·4 mins read

Valmont Industries, Inc. VMI registered profits of $42.9 million or $1.99 per share in first-quarter 2020, up from $36.1 million or $1.64 per share in the year-ago quarter. Moreover, its earnings per share topped the Zacks Consensus Estimate of $1.41.

Revenues in the quarter were $674.2 million, down 2.6% year over year. The figure, however, surpassed the Zacks Consensus Estimate of $671.8 million. Strong sales in North America were more than offset by reduced sales in the Utility Support Structures segment.

Segment Highlights

Infrastructure-Related

Sales in the Engineered Support Structures segment totaled $230.7 million, in line with the year-ago quarter figure, as higher sales in North America markets were offset by reduced sales in the Asia Pacific region, mainly in the Access Systems product line.

Sales in the Utility Support Structures segment fell 7.6% year over year to $225.5 million largely due to a major solar tracker project in 2019 that did not repeat this year.

Sales in the Coatings segment rose 1.5% year over year to $88.1 million. It was supported by larger volumes in North American markets, partly offset by unfavorable currency translation impacts.

Agriculture-Related

Sales in the Irrigation unit amounted to $156.7 million, up 2.6% year over year. Sales in North America were $106.6 million, down 1.8% year over year. Higher sales of systems, aftermarket parts and advanced technology solutions were offset by lower industrial tubing sales.

International irrigation sales rose 13.1% year over year to $50.1 million. Higher sales in most regions offset unfavorable currency translation impacts.

Valmont Industries, Inc. Price, Consensus and EPS Surprise

 

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

Valmont Industries, Inc. price-consensus-eps-surprise-chart | Valmont Industries, Inc. Quote

Financial Position

Valmont ended the first quarter with cash and cash equivalents of $294.6 million, up 39.5% year over year. Long-term debt stood at $776.1 million, up 4.7% year over year.

Cash flows from operating activities were $62.4 million for the quarter, up from $7.9 million a year ago.

The company bought back 190,500 shares for $20.5 million in the reported quarter.

Outlook

Valmont has withdrawn its guidance for 2020 due to the unknown duration and impacts of the coronavirus pandemic.

The company expects net sales of $645-665 million for second-quarter 2020. It also expects operating margins to be 7-8.5% of net sales for the second quarter.

Valmont anticipates revenues from the Irrigation segment to be down 5-10% year over year for the second quarter as a result of recent disruptions to ethanol demand, food supply chains and unfavorable currency translation impacts.

The Coatings segment’s revenues are anticipated to be down 20-25% year over year for the second quarter due to GDP trends and recent industrial production levels.

Moreover, the company expects positive operating cash flows for the second quarter.

Price Performance

Valmont’s shares have declined 20.7% in the past year compared with the industry’s 51.2% decline.

 

 

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #4 (Sell).  

Some better-ranked stocks in the basic materials space are Kinross Gold Corporation KGC, Franco-Nevada Corporation FNV and Barrick Gold Corporation GOLD.

Kinross has a projected earnings growth rate of 44.1% for 2020. The company’s shares have surged 106.8% in a year. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Franco-Nevada has a projected earnings growth rate of 18.1% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 87.9% in a year.

Barrick Gold currently has a Zacks Rank #2 and a projected earnings growth rate of 52.9% for 2020. The company’s shares have gained 106.4% in a year.

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