Valmont Industries Q3 Profit Down 58%, Results Miss View; Lowers Outlook

(RTTNews) - Fabricated metal products maker Valmont Industries, Inc. (VMI) on Tuesday reported a 58 percent decline in profit for the third quarter from last year, reflecting lower sales at its utility support structures segment as well as flat sales at its irrigation segment.

Results for the quarter missed analysts' expectations. Looking ahead, the company once again lowered its earnings outlook for fiscal 2014. The company's shares declined more than 3 percent in extended trades.

Mogens Bay, Valmont's Chairman and Chief Executive Officer said, "It was a particularly weak quarter in the Utility Support Structures Segment. Underutilization of capacity and price weakness in certain markets led to a 59% decline in segment profitability."

The Omaha, Nebraska-based company's net income for the third quarter was $23.56 million or $0.92 per share, down from $56.49 million or $2.10 per share in the year-ago period.

In the latest quarter, a tender offer resulted in a non-recurring expense of $0.95 per share after tax and a fair market value adjustment for Delta EMD shares of $0.05 per share. The prior-year quarter's results included an $0.31 per share reduction in net earnings arising from a change in the U.K. tax rate.

Adjusted net earnings for the quarter was $1.92 per share, compared to $2.41 in the prior-year period. On average, nine analysts polled by Thomson Reuters expected the company to report earnings of $2.18 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter decreased 2 percent to $765.67 million from $778.03 million in the year-ago quarter. Analysts had a consensus revenue estimate of $795.29 million for the quarter.

Utility support structures segment sales for the quarter declined 21 percent from the prior-year period to $181.19 million, reflecting a reduction in North American volumes, including lack of large projects. However, the segment accounted for 23 percent of the quarter's sales.

Irrigation segment sales were virtually unchanged from last year at $174.29 million and accounted for 22 percent of sales for the quarter.

Engineered Infrastructure Products segment sales rose 13 percent from the year-ago period to $294.90 million and represented 37 percent of quarterly sales. Coatings segment sales decreased 3 percent to $86.74 million and accounted for 11 percent of sales for the quarter.

Looking ahead to fiscal 2014, Valmont Industries now forecasts earnings in a range of $8.55 to $8.65 per share, down from the prior range of $8.70 to $8.90 per share. Analysts expect the company to report earnings of $9.12 per share for the year on revenues to $3.23 billion.

The revised outlook includes the impact of share repurchase, but excludes the $0.18 year-to-date fair value adjustments for Delta EMD and also excludes the $0.91 year-to-date expenses associated with the company's debt refinancing.

In the Utility Support Structures Segment, the company expects significant fourth-quarter sales improvements and a return to double digit operating income percent, compared to the third quarter, although well below last year's fourth-quarter levels.

The company noted that in the Irrigation Segment, the fall harvest is not complete and until then, growers are not inclined to visit dealers, resulting in a later start to the selling season.

VMI closed Thursday's regular trading session at $138.35, up $3.81 or 2.83 percent on a volume of 454,950 shares. However, in after-hours, the stock declined $4.35 or 3.14 percent to $134.00.