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Valmont's (VMI) Earnings and Revenues Beat Estimates in Q3

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·4 min read
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Valmont Industries, Inc. VMI registered profits of $51.65 million or $2.40 per share in third-quarter 2021, up from $39.34 million or $1.84 per share in the year-ago quarter.

Barring one-time items, adjusted earnings were $2.57 per share in the reported quarter, up from $1.99 logged in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of $2.43.

Revenues in the quarter were $868.8 million, up 18.4% year over year. The top line also surpassed the Zacks Consensus Estimate of $861.1 million. Sales growth in the quarter was led by robust sales in the Irrigation segment due to strong global agricultural market fundamentals driving positive farmer sentiment and deliveries of the large Egypt project that continued in the quarter.

Segment Highlights

Infrastructure-Related

Sales in the Engineered Support Structures segment increased 10% year over year to $281.1 million. Favorable pricing and increased sales of wireless communication products and components were the major growth drivers.

Sales in the Utility Support Structures segment rose roughly 1% year over year to $276.5 million. Significantly higher pricing and higher volumes in North American markets due to the ongoing investments in grid resiliency were mostly offset by reduced global sales that were primarily related to large projects in 2020 that were not repeated this year.

Sales in the Coatings segment increased 10% year over year to $96.7 million on the back of higher average selling prices and sales from the new green-field facility in Pittsburgh, PA that started operations earlier this year.

Agriculture-Related

Sales in the Irrigation unit amounted to $240.3 million, up 72.6% year over year on higher volumes across all markets, favorable pricing, and a rise in technology sales. Sales in North America were $116.3 million, up 53.4% year over year led by persistent strength in agricultural markets and higher industrial tubing sales.

International irrigation sales nearly doubled year over year to $124 million from $63.4 million. Ongoing deliveries of large projects in Egypt, strong demand in Brazil, and higher sales in Europe and Africa acted as tailwinds.

Financial Position

Valmont ended third-quarter 2021 with cash and cash equivalents of $170 million, down 61.4% year over year. Long-term debt was $897.5 million, increasing 15.1%.

Cash flows from operating activities were $61.8 million in the third quarter, down almost 77% year over year.

The company purchased $2.5 million of company stock in the reported quarter.

Outlook

The company has raised the bottom end of its full-year EPS guidance and has maintained the prior assumptions for the remainder of 2021. It now expects earnings of $10.10-$10.60, up from the prior range of $9.90-$10.60 per share. Adjusted earnings are now forecast to be $10.60-$11.10, up from $10.40-$11.10 expected earlier.

Net sales growth for the full year is now expected in the range of 17-18%, up from the previous range of 16-19% and irrigation segment sales growth is expected in the range of 50-53%, up from 45-50%. The revised guidance reflects strength in global agricultural markets, continued favorable end-market demand across all businesses and expected recovery of cost inflation.

Price Performance

The company’s shares have surged 76.6% in the past year compared with the industry’s rise of 85%.

Zacks Investment Research
Zacks Investment Research

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Zacks Rank & Key Picks

Valmont currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the basic materials space include AdvanSix Inc. ASIX, DAQO New Energy Corp. DQ, and Element Solutions Inc. ESI, each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AdvanSix has a projected earnings growth rate of 178.1% for the current year. The company’s shares have shot up 195.9% over the past year.

DAQO has a projected earnings growth rate of 566.9% for the current year. The company’s shares have grown 51.5% over the past year.

Element has a projected earnings growth rate of 44.8% for the current year. The company’s shares have climbed 86% over the past year.


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