Valmont Industries ( VMI ) posted profit of $56.5 million or $2.10 per share in the third quarter of 2013, essentially flat year over year as higher sales were masked by an increase in tax expenses.
Barring deferred tax-related expenses associated with a change in tax rate, earnings came in at $2.41 per share in the reported quarter, missing the Zacks Consensus Estimate by 4 cents. Tax expenses jumped roughly 54% year over year to $43.9 million in the reported quarter.
Valmont, which is among the prominent steel-pipe and tube companies along with MRC Global Inc. ( MRC ), Edgen Group Inc. ( EDG ) and Tenaris SA ( TS ), registered revenues of $778 million in the quarter, a roughly 7% year over year rise. The company saw gains across the board in the quarter. However, sales lagged the Zacks Consensus Estimate of $801 million.
Revenues from the Utility Support Structures segment rose 5% year over year to $229.4 million in the reported quarter, backed by continued investment in the North American transmission grid. Sales, however, fell in the international utility markets. Valmont continues to add capacity in anticipation of higher future demand.
Irrigation segment raked in the biggest sales gain in the quarter with revenues rising 12% to $175.1 million, boosted by increased North American demand. Sales also improved in overseas markets. Valmont expects need for efficient mechanized irrigation to rise based on population growth, improved diets and competing demands for water are other factors.
Revenues from the Engineered Infrastructure Products division went up 6% year over year to $260.3 million. Sales were driven by the Locker Group acquisition and gains across North America and Europe.
Revenues from lighting and traffic products were flat year over year in North America and were comparable in Europe. Wireless communication product sales rose on increasing investment in 4G network to support higher data demand. Revenues from lighting and traffic products rose in Asia Pacific while wireless communication sales fell in the region.
Coatings segment sales rose 6% to $89 million. Contributions of Canadian galvanizer acquisition led to higher sales in North America. Sales were down in the Asia Pacific region on account of a weak Australian market and loss associated with a divestiture.
Valmont exited the quarter with cash and cash equivalents of $543.4 million, up 27% year over year. Total long-term debt fell 0.4% year over year to $471.6 million.
Looking ahead, Valmont expects its utility business to benefit from strong order backlog and additional manufacturing capacity coming online in the fourth quarter. For the Irrigation division, it sees results to come somewhat below last year's levels as a late harvest in North America is expected to cut customer traffic in dealerships.
Moreover, Valmont anticipates favorable sales and operating income comparisons in the Engineered Infrastructure Products segment. The company expects its Coatings segment to continue its healthy momentum in the fourth quarter.
Valmont envisions its earnings per share for full-year 2013 to be roughly $11.00. For 2014, the company sees sustained improvement in the Utility Support and Engineered Infrastructure Support divisions. Its coatings business is expected to continue to benefit from healthy market demand.
Valmont currently carries a Zacks Rank #4 (Sell).
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