FULL YEAR: VALMONT'S SALES INCREASE 11%, NET EARNINGS UP 3%
Feb. 13, 2013
Source: Valmont Industries news release
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Valmont Industries, Inc. (NYSE: VMI), a leading global provider of engineered products and services for infrastructure and mechanized irrigation equipment for agriculture, reported fourth quarter sales of $815.0 million compared with $752.7 million for the same period of 2011. Fourth quarter 2012 operating income was $111.7 million versus $77.4 million in 2011.
When comparing this year's $2.43 fourth quarter diluted earnings per share to last year's reported fourth quarter diluted earnings per share of $4.33, it should be noted that included in last year's fourth quarter was $2.50 per share of favorable one-time items recognized as a result of a reorganization of the Company's legal structure. Excluding those favorable one-time items, fourth quarter 2011 diluted earnings per share were $1.83.
For fiscal 2012, sales were $3.0 billion versus $2.7 billion in 2011. Operating income for fiscal 2012 was $382.3 million versus $263.3 million in 2011. Valmont's fiscal year net earnings were $234.1 million, or $8.75 per diluted share compared with 2011 fiscal year earnings of $228.3 million, or $8.60 per diluted share, which included the aforementioned $2.50 per share of favorable one-time items in the fourth quarter of 2011.
Fourth Quarter Review:
"The main drivers of record fourth quarter operating results were the substantial sales increases in the Utility Support Structures and Irrigation Segments," said Mogens C. Bay, Valmont's Chairman and Chief Executive Officer. "Increased sales of wireless communication products and intercompany sales of utility products contributed to improved results in the Engineered Infrastructure Products Segment.
In the Coatings Segment, a decline in Australian demand was the main reason for lower sales. Those businesses reported in "Other" had improved operating margins despite lower sales.
"Increased volumes in both the Utility Support Structures and Irrigation Segments allowed us to realize significant fixed cost leverage during the quarter. This led to a 13.7% operating margin for the quarter, compared with last year's 10.3%."
Irrigation Segment (24% of 4th Quarter Sales)
Center pivot and linear move mechanized irrigation equipment and parts for agriculture in global markets.
Sales rose 13% to $203.4 million, with gains in North America more than offsetting a decline in international sales. While sales increased in most regions, total international sales declined due to a reduction in project business in North Africa.
North American demand was supported by a couple of factors. Historically high crop prices resulted in high levels of farm income. In addition, last summer's drought impacted many growing regions of the U.S.
Following periods of drought, in addition to the inherent benefits of mechanized irrigation, the economic benefits of irrigation during a drought becomes an additional driver. As a result, a large number of growers are seeking the benefits of irrigation. This led to record order rates and greatly improved sales during the fourth quarter.
Long-term drivers remain strong for the irrigation market. World population growth and dietary improvement create a long-term increasing demand for food.
Water availability concerns will pressure agriculture to reduce its water consumption over time. Valmont's mechanized irrigation equipment helps to provide a solution to this global dilemma by improving farm productivity and using water efficiently.
Operating income grew 49% to $40.5 million and was 19.9% of segment sales. The improvement in operating margin was largely the result of operating leverage, a favorable sales mix and good factory performance.