Valmont Reports First Quarter 2024 Results and Raises Full-Year 2024 Guidance

Rhea-AI Summary

Valmont Industries, Inc. reported strong Q1 2024 financial results, with reduced sales but expanded margins. Infrastructure segment saw continued utility market demand, while Agriculture faced lower sales due to normalized backlog levels. Operating income increased by 11%, diluted EPS grew by 24.5%, and the company repurchased 96,200 shares.

Positive

• Expanded margins despite reduced sales

• Operating income increased by 11%

• Diluted EPS grew by 24.5%

• Successful share repurchase program of 96,200 shares

Negative

• Net sales decreased by 8%

• Agriculture segment faced lower sales due to normalized backlog levels

• Lower sales in North America and Brazil

Insights

Financial Analyst

Valmont Industries' Q1 2024 figures show a noteworthy increase in operating income and diluted earnings per share despite a decrease in net sales. The operating income boost by 11.0% and diluted EPS growth of 24.5% are indicative of improved operational efficiencies and cost management. The repurchase of shares under the Accelerated Share Repurchase program also reflects a shareholder-friendly capital allocation strategy, which could result in earnings accretion and signal management's belief in the company's intrinsic value. The company's ability to expand margins in a lower sales environment demonstrates a robust business model. Moreover, raising the full-year 2024 guidance for net sales and diluted EPS adds to investor confidence, hinting at a stable future outlook. However, investors should also note the 8.0% decline in net sales, potentially due to market cyclicality and external factors affecting both the Infrastructure and Agriculture sectors.

Market Research Analyst

The mixed performance of Valmont's segments underscores the divergence between infrastructure and agriculture demand. The Infrastructure segment's operating income improved significantly due to strong utility market demand and a strategic approach to pricing, signifying strong sectoral dynamics and possibly greater demand in the future due to the global energy transition. Conversely, the Agriculture segment's sales decline, particularly in North America and Brazil, suggests sensitivity to commodity prices and backlog normalization. Valmont’s strategy to navigate these challenges, seen in the raise of its full-year guidance, suggests effective anticipation of market movements and strategic planning. Investors should consider the resilience of Valmont's diversified business model and the company's ability to adapt to market conditions while also keeping an eye on sector-specific risks.

OMAHA, Neb.--(BUSINESS WIRE)-- Valmont^® Industries, Inc. (NYSE: VMI), a global leader that provides vital infrastructure and advances agricultural productivity while driving innovation through technology, today reported financial results for the first quarter ended March 30, 2024.

President and Chief Executive Officer Avner M. Applbaum commented, “We are pleased to have achieved strong quarterly results that reflect our team’s focus on execution and commitment to enhancing shareholder value. We meaningfully expanded margins year-over-year on lower sales through successful commercial execution, improved operational efficiencies in our facilities, and reduced SG&A expenses due to structural cost improvement actions taken in late 2023. In Infrastructure, our strong results reflect continued robust utility market demand and effective pricing strategies across the portfolio, and we achieved another quarter of operating margin improvement year-over-year even as telecommunications markets remain muted. In Agriculture, as expected, sales in North America and Brazil were lower as backlog levels in those regions normalized this year compared to the first quarter of 2023, and we continue to see soft but stable market demand amid lower grain prices. Our performance this quarter demonstrates the effectiveness of our Valmont Business Model, and we remain confident in our strategies, focusing on value creation and delivering outstanding results.”

First Quarter 2024 Highlights (all metrics compared to First Quarter 2023 unless otherwise noted)

• Net Sales decreased 8.0% to $1.0 billion compared to $1.1 billion
• Operating Income increased 11.0% to $131.6 million or 13.5% of net sales compared to $118.5 million or 11.1% of net sales
• Diluted Earnings per Share grew 24.5% to $4.32 compared to $3.47
• Generated operating cash flows of $23.3 million; cash and cash equivalents at the end of the first quarter were $169.2 million
• Completed the $120.0 million Accelerated Share Repurchase program resulting in the repurchase of approximately 96,200 additional shares of Company stock in the first quarter

Key Financial Metrics

First Quarter 2024
(000s except per-share amounts)		3/30/2024				4/1/2023
		Q1 2024				Q1 2023				vs. Q1 2023
Net Sales		$	977,828			$	1,062,481			(8.0	)%
Gross Profit			306,216				308,585			(0.8	)%
Gross Profit as a % of Net Sales			31.3	%			29.0	%
Operating Income			131,553				118,466			11.0	%
Operating Income as a % of Net Sales			13.5	%			11.1	%
Net Earnings Attributable to Valmont Industries, Inc.			87,822				74,540			17.8	%
Diluted Earnings per Share			4.32				3.47			24.5	%
Weighted Average Shares Outstanding			20,321				21,512

First Quarter 2024 Segment Review

Infrastructure (73.7% of Net Sales)

Products and solutions to serve the infrastructure markets of utility, solar, lighting and transportation, and telecommunications, along with coatings services to protect metal products

Sales of $723.6 million decreased 1.7% year-over-year. Higher volumes in the Transmission, Distribution, and Substation and Solar product lines were driven by continued strong utility market demand and ongoing investments in the global energy transition. These volume increases, and favorable pricing across the portfolio, were more than offset by significantly lower Telecommunications volumes.

Operating Income was $117.9 million or 16.4% of net sales compared to $94.4 million or 12.9% of net sales in the first quarter of 2023 driven by commercial and pricing strategies, deliberate actions that improved overall cost of goods sold, and lower SG&A expenses.

Agriculture (26.3% of Net Sales)

Center pivot components and linear irrigation equipment for agricultural markets, including parts and tubular products, and advanced technology solutions for precision agriculture

Sales of $258.7 million decreased 22.1% year-over-year. In North America, irrigation equipment volumes were lower as the first quarter of 2023 benefited from the ongoing delivery of elevated backlog. Average irrigation selling prices were slightly lower compared to last year.

International sales decreased compared to last year. Primary drivers were lower sales in Brazil due to more normalized backlog levels as compared to the first quarter of 2023 and softer soybean prices, along with a decrease in Middle East project sales. The sales contribution from the HR Products acquisition partially offset the lower sales.

Operating Income was $41.0 million or 15.9% of net sales compared to $53.3 million or 16.1% of net sales in the first quarter of 2023. Improvement in gross profit margins and the benefit of lower SG&A expenses were more than offset by the impact of lower volumes.

Balance Sheet, Liquidity, and Capital Allocation

The Company generated operating cash flows of $23.3 million, and cash and cash equivalents were $169.2 million at the end of the first quarter. During the quarter, Valmont completed the $120.0 million Accelerated Share Repurchase (“ASR”) program commenced in the fourth quarter of 2023. The total number of shares of Valmont common stock repurchased under the ASR program was 535,141 shares at an average price of $224.24 per share, and $136.1 million remains on the authorized share repurchase program. Fitch Ratings, Inc. reaffirmed the Company’s BBB-/Stable credit rating during the quarter. Valmont remains committed to maintaining its investment-grade rating.

Raising 2024 Full-Year Financial Outlook and Updating Key Assumptions

Considering current strong market demand and an expectation of continued positive performance in the Infrastructure segment, along with improved visibility of international agriculture projects, the Company is increasing its 2024 full-year net sales and diluted earnings per share outlook from the previous indications that were communicated last quarter and providing updated key assumptions for the year.

Metric	Previous Outlook	Current Outlook
Net Sales Change	(3.0%) to flat	(2.0%) to 0.5%
Infrastructure Net Sales	Growth Approaching Mid-Single Digits	No Change from Previous Outlook
Agriculture Net Sales	Down 15 to 20% vs. PY	Down 10 to 15% vs. PY
Diluted Earnings per Share	$14.25 to $15.50	$15.40 to $16.40

• Effective tax rate of approximately 26%
• Minimal expected foreign currency translation impact on net sales
• Capital expenditures now expected to be in the range of $110.0 to $125.0 million to support strategic growth initiatives

Applbaum added, “We are raising our 2024 net sales and diluted earnings per share expectations as we remain focused on execution, commercial excellence, and operational efficiencies to drive margin expansion. Improved visibility to international agriculture projects supports a slightly more positive view of Agriculture sales for the full year. Demand for our Infrastructure products remains strong. We are making strategic capacity investments to meet the needs of our customers and take advantage of the visible opportunities ahead of us. Our broad exposure to infrastructure and agriculture markets helps us manage market cycles and share resources across businesses, improving efficiency and returns on investment. We believe these advantages will become increasingly important as the energy transition accelerates and agriculture markets recover, positioning us well to allocate resources to opportunities that strengthen our core businesses and deliver strong returns on invested capital. By effectively managing costs, we are further enhancing our ability to expand margins. We remain focused on driving sustainable growth while delivering superior value to our shareholders for years to come.”

A live audio discussion with Avner M. Applbaum, President and Chief Executive Officer, and Timothy P. Francis, Interim Chief Financial Officer, will be accessible by telephone on Thursday, May 2, 2024 at 8:00 a.m. CT by dialing +1 877.407.6184 or +1 201.389.0877 (no Conference ID needed), or via webcast by pointing browsers to this link: Valmont Industries 1Q 2024 Earnings Conference Call. A slide presentation will simultaneously be available for download on the Investors page of valmont.com. A replay of the event can be accessed three hours after the call at the above link or by telephone at +1 877.660.6853 or +1 201.612.7415. Please use access code 13742903. The replay will be available through 10:59 p.m. CT on Thursday, May 9, 2024.

About Valmont Industries, Inc.

For nearly 80 years, Valmont has been a global leader in creating vital infrastructure and advancing agricultural productivity. Today, we remain committed to doing more with less by innovating through technology. Learn more about how we’re Conserving Resources. Improving Life.^® at valmont.com.

Concerning Forward-Looking Statements

This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which Valmont operates, as well as management’s perceptions of historical trends, current conditions, expected future developments, and other factors believed to be appropriate under the circumstances. As you read and consider this release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond Valmont’s control), and assumptions. Although management believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Valmont’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include, among other things, risk factors described from time to time in Valmont’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks, and actions and policy changes of domestic and foreign governments. The Company cautions that any forward-looking statement included in this press release is made as of the date of this press release and the Company does not undertake to update any forward-looking statement.

Website and Social Media Disclosure

The Company uses its website and social media channels identified on its website as channels of distribution of Company information. The information that the Company posts through these channels may be deemed material. Accordingly, investors should monitor these channels, in addition to following the Company’s press releases, Securities and Exchange Commission filings, and public conference calls and webcasts. The contents of the Company’s website and social media channels are not part of this press release.

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars and shares in thousands, except per-share amounts)
(Unaudited)
		Thirteen weeks ended
		March 30,				April 1,
		2024				2023
Net sales		$	977,828			$	1,062,481
Cost of sales			671,612				753,896
Gross profit			306,216				308,585
Selling, general, and administrative expenses			174,663				190,119
Operating income			131,553				118,466
Other income (expenses):
Interest expense			(16,221	)			(13,105	)
Interest income			1,779				830
Gain on deferred compensation investments			1,431				1,194
Other			(105	)			(2,376	)
Total other income (expenses)			(13,116	)			(13,457	)
Earnings before income taxes and equity in loss of nonconsolidated subsidiaries			118,437				105,009
Income tax expense			29,988				31,843
Equity in loss of nonconsolidated subsidiaries			(20	)			(821	)
Net earnings			88,429				72,345
Loss (earnings) attributable to redeemable noncontrolling interests			(607	)			2,195
Net earnings attributable to Valmont Industries, Inc.		$	87,822			$	74,540
Weighted average shares outstanding - Basic			20,188				21,269
Earnings per share - Basic		$	4.35			$	3.50
Weighted average shares outstanding - Diluted			20,321				21,512
Earnings per share - Diluted		$	4.32			$	3.47
Cash dividends per share		$	0.60			$	0.60

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
		Thirteen weeks ended
		March 30,				April 1,
		2024				2023
Infrastructure
Net sales		$	720,733			$	732,140
Gross profit			217,617				200,432
as a percent of net sales			30.2	%			27.4	%
Selling, general, and administrative expenses			99,753				106,080
as a percent of net sales			13.8	%			14.5	%
Operating income			117,864				94,352
as a percent of net sales			16.4	%			12.9	%
Agriculture
Net sales		$	257,095			$	330,341
Gross profit			88,599				108,153
as a percent of net sales			34.5	%			32.7	%
Selling, general, and administrative expenses			47,626				54,830
as a percent of net sales			18.5	%			16.6	%
Operating income			40,973				53,323
as a percent of net sales			15.9	%			16.1	%
Corporate
Selling, general, and administrative expenses		$	27,284			$	29,209
Operating loss			(27,284	)			(29,209	)

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
		Thirteen weeks ended March 30, 2024
		Infrastructure			Agriculture			Intersegment				Consolidated
Geographical Market:
North America		$	568,572		$	159,915		$	(4,466	)		$	724,021
International			155,042			98,820			(55	)			253,807
Total sales		$	723,614		$	258,735		$	(4,521	)		$	977,828
Product Line:
Transmission, Distribution, and Substation		$	325,256		$	—		$	—			$	325,256
Lighting and Transportation			222,096			—			—				222,096
Coatings			87,090			—			(2,826	)			84,264
Telecommunications			53,961			—			—				53,961
Solar			35,211			—			(55	)			35,156
Irrigation Equipment and Parts			—			233,120			(1,640	)			231,480
Technology Products and Services			—			25,615			—				25,615
Total sales		$	723,614		$	258,735		$	(4,521	)		$	977,828

		Thirteen weeks ended April 1, 2023
		Infrastructure			Agriculture			Intersegment			Consolidated
Geographical Market:
North America		$	584,083		$	182,869		$	(5,374)		$	761,578
International			152,023			149,294			(414)			300,903
Total sales		$	736,106		$	332,163		$	(5,788)		$	1,062,481
Product Line:
Transmission, Distribution, and Substation		$	314,820		$	—		$	—		$	314,820
Lighting and Transportation			229,136			—			—			229,136
Coatings			90,114			—			(3,552)			86,562
Telecommunications			68,137			—			—			68,137
Solar			33,899			—			(414)			33,485
Irrigation Equipment and Parts			—			299,181			(1,822)			297,359
Technology Products and Services			—			32,982			—			32,982
Total sales		$	736,106		$	332,163		$	(5,788)		$	1,062,481

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited)
		March 30,			December 30,
		2024			2023
ASSETS
Current assets:
Cash and cash equivalents		$	169,195		$	203,041
Receivables, net			659,036			657,960
Inventories			668,743			658,428
Contract assets			191,483			175,721
Prepaid expenses and other current assets			91,114			92,479
Total current assets			1,779,571			1,787,629
Property, plant, and equipment, net			608,403			617,394
Goodwill and other non-current assets			1,077,407			1,072,425
Total assets		$	3,465,381		$	3,477,448
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS,
AND SHAREHOLDERS' EQUITY
Current liabilities:
Current installments of long-term debt		$	620		$	719
Notes payable to banks			2,029			3,205
Accounts payable			327,414			358,311
Accrued expenses			238,322			277,764
Contract liabilities			84,041			70,978
Income taxes payable			10,295			—
Dividends payable			12,113			12,125
Total current liabilities			674,834			723,102
Long-term debt, excluding current installments			1,107,644			1,107,885
Operating lease liabilities			157,279			162,743
Other non-current liabilities			71,353			66,646
Total liabilities			2,011,110			2,060,376
Redeemable noncontrolling interests			44,980			62,792
Shareholders' equity			1,409,291			1,354,280
Total liabilities, redeemable noncontrolling interests, and shareholders' equity		$	3,465,381		$	3,477,448

VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
		Thirteen weeks ended
		March 30,				April 1,
		2024				2023
Cash flows from operating activities:
Net earnings		$	88,429			$	72,345
Depreciation and amortization			23,536				24,558
Contribution to defined benefit pension plan			(16,714	)			(15,259	)
Change in working capital			(88,924	)			(83,206	)
Other			17,005				22,761
Net cash flows from operating activities			23,332				21,199
Cash flows from investing activities:
Purchase of property, plant, and equipment			(15,010	)			(22,361	)
Other			(3,629	)			572
Net cash flows from investing activities			(18,639	)			(21,789	)
Cash flows from financing activities:
Net proceeds (payments) on short-term borrowings			(1,136	)			5,302
Proceeds from long-term borrowings			10				125,000
Principal payments on long-term borrowings			(175	)			(10,796	)
Dividends paid			(12,126	)			(11,742	)
Purchase of redeemable noncontrolling interests			(17,745	)			—
Purchase of treasury shares			—				(111,115	)
Other			(3,662	)			(9,658	)
Net cash flows from financing activities			(34,834	)			(13,009	)
Effect of exchange rates on cash and cash equivalents			(3,705	)			1,141
Net change in cash and cash equivalents			(33,846	)			(12,458	)
Cash and cash equivalents—beginning of period			203,041				185,406
Cash and cash equivalents—end of period		$	169,195			$	172,948

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240501443062/en/

Renee Campbell

renee.campbell@valmont.com

Source: Valmont Industries, Inc.

FAQ

What were Valmont Industries, Inc.'s Q1 2024 financial highlights?

Net sales decreased by 8%, operating income increased by 11%, and diluted EPS grew by 24.5% compared to Q1 2023.

How did the Infrastructure segment perform in Q1 2024?

Infrastructure segment saw continued utility market demand and achieved operating income of $117.9 million.

What factors led to lower sales in the Agriculture segment?

Lower sales in North America and Brazil were due to normalized backlog levels and softer soybean prices.

What share repurchase program did Valmont Industries, Inc. complete?

Valmont completed a $120.0 million Accelerated Share Repurchase program, repurchasing approximately 96,200 shares of Company stock.

What is Valmont Industries, Inc.'s updated 2024 full-year outlook?

The company increased its 2024 full-year net sales and diluted earnings per share outlook, with a focus on margin expansion and international agriculture projects.