Valmont's (VMI) Q3 Earnings Top Estimates, Revenues Lag
Valmont Industries, Inc. VMI reported a loss of $49 million or $2.34 per share in third-quarter 2023, down from profit of $72.1 million or $3.34 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $4.12, up from $3.49 in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $3.78.
The company’s revenues were $1,050.3 million in the quarter, down 4.3% year over year. The top line lagged the Zacks Consensus Estimate of $1,100.3 million.
Valmont Industries, Inc. Price, Consensus and EPS Surprise
Valmont Industries, Inc. price-consensus-eps-surprise-chart | Valmont Industries, Inc. Quote
Segment Review
The third-quarter revenues in the infrastructure segment remained on par with the previous year, totaling $755.1 million. It lagged our estimate of $850.6 million. This was primarily attributed to greater sales volumes, particularly in the Solar, Lighting and Transportation and Transmission, Distribution and Substation product categories. Although there was a decline in Telecommunications volumes and reduced pricing due to lower steel costs in the TD&S product line, this was offset by higher pricing in other segments of the product portfolio.
Agriculture segment revenues totaled $298.5 million, down 8.8% year over year. It fell short of our estimate of $376.1 million. Global sales of agricultural technology products and services remained consistent with the previous year. In North America, the decline in sales was primarily attributed to reduced sales volumes of irrigation equipment, in line with the anticipated muted farmer sentiment for the quarter. In the third quarter of 2022, the company saw benefits from delivering an elevated backlog. Selling prices for irrigation equipment were in line with last year's averages. On the international front, sales growth was fueled by increased project sales in the EMEA region, record sales in Brazil and higher sales in Argentina.
Financials
VMI ended the quarter with cash and cash equivalents of $172.6 million, up 4% year over year. Long-term debt was $977.3 million, up 4.5% year over year.
Valmont repurchased $31.5 million of its stock during the quarter. It had $314.7 million remaining on the share repurchase program at the end of the quarter.
Outlook
For 2023, Valmont revised its guidance for net sales growth to be -3 to -4% from its previous view of 0-2%.EPS (as reported) is expected to be $7.20 to $7.50 per share. Adjusted EPS is now forecast at $14.80 to $15.10. It also anticipates capital expenditures in the $100-$110 million range for 2023. The company also expects a full-year improved operating margin compared with 2022 levels.
Price Performance
VMI shares have fallen 26% in the past year against the industry’s fall of 3.2% over the same period.
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Zacks Rank & Key Picks
Valmont currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the industrial products space are Emerson Electric Co. EMR and Applied Industrial Technologies, Inc. AIT, sporting a Zacks Rank #1 (Strong Buy) and Caterpillar Inc. CAT, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
In the past 90 days, the Zacks Consensus Estimate for EMR’s current-year earnings has been revised upward by 6%. EMR beat the Zacks Consensus Estimate in three of the last four quarters, with the average earnings surprise being 7.4%. The company’s shares have rallied 3.4% in the past year.
The earnings estimate for AIT’s current year is pegged at $9.13, indicating a year-over-year growth of 4.3%. AIT beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 15%. The company’s shares have rallied 25.6% in the past year.
The earnings estimate for Caterpillar’s current year is pegged at $20.11, indicating a year-over-year growth of 45.3%. CAT beat the Zacks Consensus Estimate in three of the last four quarters, with the average earnings surprise being 18.5%. The company’s shares have rallied 15.5% in the past year.
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