Fabricated metal products maker
) has purchased the assets of Canada-based Pure Metal
Galvanizing. The terms of the buyout were not disclosed.
Pure Metal, which has annual sales of roughly CAD$34 million
($34.4 million), is a market leader in custom hot dip galvanizing
in Canada. It operates five kettles out of three locations in
The purchase of the Canadian galvanizing operations reinforces
Valmont's global galvanizing business. The company sees the
acquisition to be modestly accretive to its earnings for
Valmont is seeing significant strength across the utility and
irrigation markets. The outlook for irrigation equipment is
healthy while demand for utility support structures is expected
to rise. The company expects to post double-digit earnings growth
this year despite the European slowdown.
Valmont's Irrigation and Coatings segments are witnessing
healthy momentum recently. In the Irrigation segment, improving
North American equipment demand amid the ongoing drought
conditions and higher farm income is boosting sales and
profitability. The Coatings segment is benefiting from moderating
The company is also poised to savor incremental opportunity in
the utility market. The global transmission and distribution
markets are seen as major long-term growth opportunities.
Valmont is actively pursuing capacity expansion through new
constructions and extension of existing facilities to meet the
increasing demand from utility customers in North America.
Moreover, it remains committed to returning value to its
shareholders in the form of regular dividend payouts.
However, the company's core Engineered Infrastructure Products
segment remains challenged by the soft market conditions in
Europe. Nevertheless, the passage of a two year highway bill and
improvement across the wireless communications and commercial
lighting markets represents positives for this business.
Valmont, which competes with
), holds a short-term Zacks #3 Rank (Hold). We currently have a
long-term Outperform recommendation on the stock.
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