Valmont Beats Ests, Reaffirms

Valmont Industries Inc. (VMI - Analyst Report) posted second-quarter 2012 earnings of $2.24 per share, beating the Zacks Consensus Estimate of $2.16 and surpassing the prior-year quarter’s earnings of $1.72. Profit soared 31% year over year to $60 million.

Revenues jumped 14.8% year over year to $767.3 million, exceeding the Zacks Consensus Estimate of $764 million. Sales were boosted by solid growth at the company’s Utility Support Structures segment.

Segment Review

Revenues from the Utility Support Structures segment cruised 55% year over year to $212.2 million, buoyed by increased demand from electric utility companies to upgrade the North American transmission grid. International sales were essentially flat year over year as improvement in Asia-Pacific was masked by a decline in Europe.

Irrigation Segment sales rose 6% year over year to $194.5 million, driven by higher revenues across the North American and international markets.

Revenues from the Engineered Infrastructure Products division climbed 9% to $225.8 million. Sales improved in North America in the quarter. Transportation lighting and traffic product sales rose due to improved market conditions in Canada.

The company saw significant growth in sales of wireless communication structures and components. European lighting and traffic structure sales were flat while revenues rose in the Asia-Pacific region.

The Coatings Segment raked in sales of $84.8 million, stable year over year. Higher volume in North America was offset by a decline in the Asia-Pacific region.

Financial Position

Valmont exited the quarter with cash and cash equivalents of $328.4 million, up 0.5% year over year. Total long-term debt decline 3% year over year to $473.8 million.

Outlook

Valmont continues to expect its earnings to exceed $8.00 per share in 2012 based on strength in its utility segment. The company is increasing capacity to leverage the meaningful opportunity in the North American utility market. It expects the environment to remain favorable for the Irrigation and Coatings segments.

For the Engineered Infrastructure Products segment, Valmont is encouraged by the improving other structural markets in North America. Market conditions in Europe are, however, expected to remain challenging.

We currently have a long-term Outperform recommendation on Valmont. The company, which competes with Lindsay Corporation (LNN - Analyst Report), maintains a Zacks #2 Rank, which translates into a short-term (1 to 3 months) Buy rating.