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Valmont's (VMI) Q3 Earnings in Line; Currency Hurts Sales

Valmont Industries, Inc.VMI posted a profit of $12.1 million or 52 cents per share in the third quarter of 2015, down roughly 49% from $23.6 million or 92 cents per share reported in the year-ago quarter.

Barring charges related to restructuring actions, earnings came in at $1.39 per share, in line with the Zacks Consensus Estimate.

Valmont registered revenues of $632.6 million, down around 17% from $765.7 million in the year-ago quarter owing to the adverse impact of foreign exchange translation. Sales lagged the Zacks Consensus Estimate of $668 million.

Valmont's shares soared 11.9% to close at $108.74 on Oct 22.

Valmont Industries Inc. - Earnings Surprise | FindTheBest

Segment Highlights

Revenues from the Engineered Infrastructure Products division went down 11.9% year over year to $259.9 million mainly due to foreign exchange translation impact. North American results improved, driven by the Shakespeare acquisition and better lighting and traffic markets. However, lighting and traffic structure sales decreased in Europe owing to reduced government investment in infrastructure. Results in the Asian region were also adversely affected by lower oil and gas investment.

Revenues from the Utility Support Structures segment went down 9% year over year to $164.7 million in the reported quarter as a result of significantly lower steel costs and pricing pressure, and a modest decline in volumes.

The Coatings segment's sales decreased 12% to $76.2 million due to reduced volumes associated with mining and energy development projects in Australia. Lower custom and internal irrigation volumes in North America were also responsible for the decline.

The Irrigation segment's revenues plunged 36% year over year to $112.2 million as storm damaged machines were not repaired and replaced in the quarter. The revenue decline was also attributable to lower global farm income. Currency translation reduced sales in international markets, particularly in South America, while reduced demand for irrigation equipment and aftermarket parts adversely affected results in North America.

Financials

Valmont exited the quarter with cash and cash equivalents of $312.9 million, down 30.8% from $452.2 million in the year-ago quarter. Long-term debt dropped roughly 0.5% year over year to $764.8 million.

Outlook

Valmont does not anticipate prevailing market conditions to improve. The company remains focused on managing its costs structure through planned restructuring activities. It also strives to boost its market position through varied investments toward developing its product line. Further, the company is optimistic about a significant improvement in its 2016 earnings.

Zacks Rank

Valmont currently carries a Zacks Rank #4 (Sell).

Better-ranked stocks in the basic materials sector include AK Steel Holding Corp. AKS , Asanko Gold Inc. AKG and Pretium Resources Inc. PVG , all carrying a Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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