Valmont Industries (VMI) posted a profit of $64 million or $2.38 per share in the second quarter of 2014, down roughly 28.6% from $89.6 million or $3.33 per share in the year-ago quarter. Earnings per share were in line with the Zacks Consensus Estimate.
Valmont, which is among the prominent steel-pipe and tube companies along with MRC Global Inc. (MRC), Mueller Water Products, Inc. (MWA) and Tenaris SA (TS), registered revenues of $842.6 million in the quarter, down 4.1% from $878.7 million in the year-ago quarter. The decrease was mainly due to lower sales in the Utility Support Structures, Coatings and Irrigation segments. Sales lagged the Zacks Consensus Estimate of $860 million.
Revenues from the Utility Support Structures segment declined 7% year over year to $213 million in the reported quarter as a result of a decline in North America. There was a decline in the percentage of sales from big transmission projects.
Irrigation segment revenues declined 19% year over year to $219.9 million in the quarter due to considerable sales decline in the North American markets. Sales declined in North America due to lower crop commodity prices, partly offset by increased international sales.
Revenues from the Engineered Infrastructure Products division went up 21% year over year to $304.4 million. Sales were driven by the DS-SM acquisition. Sales of lighting and traffic products in North America increased modestly but were offset by reduction in intercompany volumes to the Utility Support Structures Segment.
The Coatings segment’s sales declined 9% to $85.2 million. The decline was due to the impact of lower mining activity in Australia. Sales in North America were modestly lower due to a slow start to the quarter and lower intercompany irrigation and utility volumes.
Valmont exited the quarter with cash and cash equivalents of $455.9 million, down 7% from $490.5 million in the year-ago quarter. Long-term debt increased 1.4% year over year to $478.5 million.
Looking ahead, Valmont expects acquisition and organic growth to drive sales gains in the second half of 2014, for the Engineered Infrastructure Products Segment.
For the Utility Support Structures Segment, the company expects challenging market conditions to persist and result in unfavorable profit comparisons for the balance of 2014. In order to bring down costs and improve productivity, Valmont will consolidate the operations of one small facility into a larger one during the third quarter. This will result in one-time third quarter pre-tax charge of $2.1 million, or roughly 5 cents per share.
In the Irrigation Segment, the company expects second-half demand to reflect current crop yields.
The Coatings Segment’s results are expected to be flat with 2013 results.
Valmont forecasts its earnings for 2014 to be in the range of $9.35 to $9.65 per share, assuming that irrigation will be profitable in the second half of the year roughly at the same rate as last year and also excludes the impact of any share repurchases.
Valmont currently carries a Zacks Rank #5 (Strong Sell).