Valmont Industries, Inc. (NYSE: VMI), a provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, last week reported financial results for the first quarter ended March 28, 2020.
Sales of wireless communication structures and components decreased 11.0% as anticipated compared to last year, after a very strong first quarter of growth in 2019. Slower capital spending due to the delayed T-Mobile/Sprint merger led to lower sales. Government-mandated facility closures in China related to COVID-19 impacts represented $2.0 million of the sales decline.
“We had a strong first quarter in the majority of the regions where we operate, despite COVID-19 interruptions,” said Valmont President/CEO Stephen Kaniewski. “As discussed in previous quarters, our sales and profitability improvements were primarily driven by three strategic focus areas – capacity expansions in North America to meet strong infrastructure market demand. We are very pleased with our results across all segments, with revenue and profitability exceeding our expectations.”
First Quarter 2020 Highlights (all metrics compared to First Quarter 2019 unless otherwise noted)
- Net Sales of $674.2 million, a decline of 2.6%; strong North American sales were more than offset by anticipated lower sales in the Utility Support Structures segment due to a $30.0 million solar tracker project in 2019, that did not repeat this year, and approximately $10 million of unfavorable currency translation impact
- Operating income grew 22.5% to $66.9 million, or 9.9% of sales compared to $54.6 million or 7.9% of sales; all segments contributed to the improvement
- Diluted Earnings per Share of $1.99 grew 21.3% compared to $1.64
- Completed previously-announced acquisition of remaining 49% stake of AgSense® in the Irrigation segment
- Utility Support Structures global backlog increased 12.0% from last quarter to a record $689.0 million, including a large transmission order for the European market
- Generated operating cash flow of $62.4 million, significantly higher than last year and strongest first quarter since 2016
- Repurchased 190,500 shares of company stock for $20.5 million at an average price of $107.52 per share, prior to halting share repurchases in March
- Announced a 20% quarterly dividend increase, from $0.375 to $0.45 ($1.50 to $1.80 annualized), the first increase since 2014
- Withdrawing 2020 financial outlook due to ongoing uncertainties around business impacts from the COVID-19 pandemic
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