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Mar 28, 2020
Valmont Q1 2020 Earnings Report
Reported a strong first quarter with revenue and profitability exceeding expectations.
Key Takeaways
Valmont Industries reported a decrease in net sales by 2.6% to $674.2 million, but an increase in operating income by 22.5% to $66.9 million. Diluted earnings per share grew by 21.3% to $1.99. The company is withdrawing its 2020 financial outlook due to COVID-19 uncertainties.
Net Sales declined 2.6% to $674.2 million due to lower sales in the Utility Support Structures segment and unfavorable currency translation.
Operating income increased 22.5% to $66.9 million, representing 9.9% of sales.
Diluted Earnings per Share grew 21.3% to $1.99.
Utility Support Structures global backlog increased 12.0% from last quarter to a record $689.0 million.
Valmont
Valmont
Forward Guidance
Valmont has withdrawn its full year 2020 guidance due to the evolving impact of COVID-19 on the global economy. The company is anticipating and planning for slowdown in customer demand and increased business disruption, primarily beginning in the second quarter. They provided key assumptions and indications for the second quarter and second half of 2020.
Positive Outlook
- Anticipate positive operating cash flows
- Balance sheet that reflects strong financial and operational position, with ample liquidity and room under debt covenants
- Prepared to execute additional cost management measures, as appropriate
- Assuming no additional closures of large manufacturing facilities globally due to COVID-19
- Long-term, enduring market drivers for all our businesses are strong, and we remain confident in our long-term growth strategy.
Challenges Ahead
- Net sales estimated to be between $645 million and $665 million for Q2
- Operating margins estimated to be in the range of 7.0% to 8.5% of net sales for Q2
- Irrigation segment revenue expected to be down 5.0% to 10.0% from prior year for Q2, due to recent disruptions to food supply chains, ethanol demand and unfavorable currency translation impacts
- Coatings segment revenue expected to be down 20.0% to 25.0% from prior year for Q2, as a result of recent industrial production levels and GDP trends
- Planning and anticipating for recessionary forces to potentially impact global demand and revenues due to volatile market demand profiles for the second half of the year