Valmont Industries, Inc. (VMI - Free Report) entered into a definitive deal to sell its Australian mining consumables business, Donhad Pty. Ltd., to Moly-Cop.
Donhad was acquired as part Valmont’s buyout of Delta Plc in May 2010. The unit is reported under the Energy and Mining segment of the Valmont and it generated revenues of $83.1 million in 2016. Valmont plans to utilize the proceeds from this transaction to improve its existing infrastructure and agricultural businesses and also reinvest in opportunities to grow.
Moly-Cop is a global manufacturer of grinding media, which is used mainly by global gold, copper, iron ore producers to break down ore in primary stages. The company was acquired by American Industrial Partners in January 2017 and is now a portfolio company of the latter.
The transaction is expected to close by the end of 2017, subject to customary conditions and other regulatory approvals. The financial and other details of the transaction were not disclosed by the company.
Shares of Valmont have declined 2.6% in last three months, outperforming the industry’s 10% fall.
Valmont reported a profit of roughly $45.7 million or $2.01 per share in second-quarter 2017, up 9% from net earnings of around $42 million or $1.85 a year ago. Earnings for the reported quarter beat the Zacks Consensus Estimate of $1.93.
Net sales for the quarter were $712.7 million, up 11% year over year. The figure also surpassed the Zacks Consensus Estimate of $666.2 million. Revenues rose across all segments except Energy & Mining.
Valmont, in its second-quarter earnings call, reaffirmed its annual guidance for earnings which is expected to be slightly above $7 per share. Valmont anticipates strong demand in the utility market.
In Engineered Support Structures, the company expects improvement in the second half in response to moderating steel costs along with price recovery. Demand is anticipated to be stable in the coatings segment. The company continues to expect challenges in the Energy and Mining segment owing to difficult end market demand.
For the Irrigation segment, the company relies on its international presence to contribute to its second-half irrigation results. Valmont expects normal seasonality in the third quarter in North America while the fourth quarter will have to depend on crop prices and farmers’ sentiment post the growing season.
Valmont currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the basic materials space are The Chemours Company (CC - Free Report) , POSCO (PKX - Free Report) and Kronos Worldwide Inc. (KRO - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Chemours has expected long-term earnings growth rate of 15.5%.
POSCO has expected long-term earnings growth rate of 5%.
Kronos has expected long-term earnings growth rate of 5%.
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