Valmont Industries (VMI) Tops Q1 EPS by 45c, Revenues Beat; Offers 2Q Revenues Outlook Above Consensus, FY21 EPS Mid-Point View Below Consensus

Valmont Industries (NYSE: VMI) reported Q1 EPS of $2.57, $0.45 better than the analyst estimate of $2.12. Revenue for the quarter came in at $774.9 million versus the consensus estimate of $756.27 million.

First Quarter 2021 Highlights (all metrics compared to First Quarter 2020 unless otherwise noted)

• Net Sales of $774.9 million increased 14.9% led primarily by significantly higher sales in Irrigation and Utility Support Structures
• Operating Income increased 15.4% to $77.2 million, or 10.0% of sales compared to $66.9 million or 9.9% of sales last year, despite significant inflationary pressures
• Diluted Earnings per Share (EPS) improved to $2.57 compared to $1.99, an increase of 29.1%

“We achieved solid sales and earnings growth across the majority of our businesses this quarter through proactively implementing pricing actions starting in fourth quarter 2020, which helped largely offset steep inflationary pressures,” said Stephen G. Kaniewski, President and Chief Executive Officer. “Sales growth was led by significantly higher sales in the Irrigation segment including a 34.0% increase in technology products year-over-year, as higher agricultural commodity prices are driving positive farmer sentiment, and deliveries of the large, multi-year project for Egypt continued during the quarter. Higher volumes in the Utility Support Structures segment were driven by strong underlying demand, including in renewable energy markets, and we were pleased to be awarded two additional purchase orders for the large 500kV project in the Southeast U.S. In Engineered Support Structures, higher sales of wireless communication products helped partially offset anticipated lower transportation market volumes, and the Coatings segment continues to improve with general economic trends. We generated positive free cash flow despite unprecedented raw material inflation, driven by our continued focus on working capital management and solid earnings growth.”

GUIDANCE:

Valmont Industries sees Q2 2021 revenue of $805-830 million, versus the consensus of $800.26 million.

Valmont Industries sees FY2021 EPS of $9.00-$9.70, versus the consensus of $9.36.

While certain aspects of the pandemic's impact on global economic factors and pace of economic recovery remain somewhat uncertain, the Company will continue to provide a greater level of transparency, including key assumptions and indications for second quarter 2021, to help the financial community understand short-term impacts and expectations. The Company is also reaffirming key assumptions and indications for full-year 2021.

2Q 2021 Financial Outlook

• 2Q Net Sales estimated to be $805.0 - $830.0 million, an increase of 17.0% - 20.0% vs. prior year
• 2Q Operating Profit Margin estimated to be 9.5% - 10.5%
• Tax rate between 23.0% - 24.0%

Reaffirming Full Year 2021 Financial Outlook and Key Assumptions

• Net Sales estimated to increase 9.0% - 14.0% vs. prior year
• Favorable foreign currency translation impact of approximately 2.0% of Net Sales
• Irrigation segment sales estimated to significantly increase 27.0% - 30.0% vs. prior year
• In Utility Support Structures, significant raw material cost inflation negatively impacting gross profit margins in the first half of 2021
• Diluted Earnings per Share estimated to be $9.00 - $9.70
• Second half 2021 tax rate between 24.0% - 25.0%; no tax law changes
• Capital expenditures to be in the range of $110 - $120 million to support strategic growth initiatives and Industry 4.0 advanced manufacturing initiatives
• No closures of large manufacturing facilities, workforce disruptions, or significant supply chain interruptions

Kaniewski added, "We've had a strong start to the year, and are very encouraged by the tailwinds across many of our global markets. We entered the second quarter with a new record global backlog of more than $1.3 billion, including more than $700 million in the Utility Support Structures segment, providing a good line of sight for us into 2022. In the Engineered Support Structures segment the need for critical infrastructure investment globally gives us confidence in the long-term market growth trends, and we are benefiting from increasing demand in wireless communications markets as 5G build-outs continue to ramp. Our Coatings business is trending in-line with improving industrial production levels. In Irrigation, the large, multi-year project for Egypt and favorable market trends globally are providing strong momentum, as evidenced by our global backlog of more than $350 million. Across the portfolio, we continue to execute pricing strategies to recover the impact of unprecedented raw material cost increases and leverage the strength of our global supply chain. Additionally, our balance sheet is strong and gives us flexibility to execute our long-term strategic plan. Our strategy remains focused on long-term growth, with an organizational emphasis on ESG principles, Return on Invested Capital, Operational Excellence and strengthening our organization for the future. As always, the safety and well-being of our employees remains our number one imperative, while we continue to execute and drive growth and performance."

For earnings history and earnings-related data on Valmont Industries (VMI) click here.

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