Valmont Industries, a provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, has reported financial results for the first quarter ended March 27, 2021.
First Quarter 2021 Highlights
- Net Sales of $774.9 million increased 14.9% led primarily by significantly higher sales in Irrigation and Utility Support Structures
- Operating Income increased 15.4% to $77.2 million, or 10% of sales compared to $66.9 million or 9.9% of sales last year, despite significant inflationary pressures
- Record global backlog of more than $1.3 billion, reflecting strong market demand
- Utility Support Structures global backlog increased 27% during the quarter to a record $717 million, including receipt of two additional purchase orders totaling approximately $220 million for the large 500kV project in the Southeast U.S.
- Irrigation global backlog increased to approximately $350 million during the quarter
- Generated operating cash flow of $33.2 million; cash and cash equivalents at end of first quarter were $391.5 million
- Commissioned a 1MW solar installation at the Company's largest manufacturing facility in Valley, Nebraska, utilizing the Company's proprietary solar tracker technology to supply approximately 6% of the site's electricity demand
First Quarter 2021 Segment Review
“We achieved solid sales and earnings growth across the majority of our businesses this quarter through proactively implementing pricing actions starting in fourth quarter 2020, which helped largely offset steep inflationary pressures,” said Stephen G. Kaniewski, president and CEO. “Sales growth was led by significantly higher sales in the Irrigation segment including a 34% increase in technology products year-over-year, as higher agricultural commodity prices are driving positive farmer sentiment, and deliveries of the large, multi-year project for Egypt continued during the quarter. Higher volumes in the Utility Support Structures segment were driven by strong underlying demand, including in renewable energy markets, and we were pleased to be awarded two additional purchase orders for the large 500kV project in the Southeast U.S. In Engineered Support Structures, higher sales of wireless communication products helped partially offset anticipated lower transportation market volumes, and the Coatings segment continues to improve with general economic trends. We generated positive free cash flow despite unprecedented raw material inflation, driven by our continued focus on working capital management and solid earnings growth.”
Irrigation equipment, center pivots and linears for agricultural markets, including parts, services, and tubular products, and advanced technology solutions for water management and precision agriculture
Global sales of $229.7 million increased 46.5% year-over-year, due to higher volumes across most markets, particularly in the Middle East, and higher technology sales, partially offset by $6.1 million of unfavorable currency impacts.
North American sales of $122.8 million increased 15.2% compared to 2020, due to higher volumes across all irrigation product lines, and higher industrial tubing sales.
International sales of $106.9 million more than doubled year-over-year and increased more than 125% in local currencies. Sales growth was led by higher volumes including continued deliveries of the large multi-year Egypt project, strong demand in Brazil, improved product mix and sales from recent acquisitions.
Operating Income was $38.7 million, or 16.9% of sales compared to $23.7 million, or 15.1% of sales in 2020. Profitability growth was driven by higher volumes and improved operational efficiency, partially offset by higher R&D expense of approximately $2.0 million for technology growth investments.
Strength of Global Supply Chain and Continuation of COVID-19 Safety Protocols
Since the start of the pandemic, the Company has been taking measured and deliberate steps to strengthen its global supply chain. Through its strong relationships with many strategic suppliers, Valmont has been able to continue procuring raw materials and components critical to its operations, particularly steel. Other supply constraints have been largely mitigated by effectively utilizing the Company's global footprint. Further, current constraints at global seaports have not significantly disrupted its operations. Additionally, Valmont continues to follow CDC, WHO and local guidelines during the pandemic to protect the safety, health and well-being of employees, customers, suppliers and communities.
Second Quarter 2021 Financial Outlook and Reaffirming Full-Year Key Assumptions
While certain aspects of the pandemic's impact on global economic factors and pace of economic recovery remain somewhat uncertain, the Company will continue to provide a greater level of transparency, including key assumptions and indications for second quarter 2021, to help the financial community understand short-term impacts and expectations. The Company is also reaffirming key assumptions and indications for full-year 2021.
2Q 2021 Financial Outlook
- 2Q Net Sales estimated to be $805-$830 million, an increase of 17%-20% vs. prior year
- 2Q Operating Profit Margin estimated to be 9.5%-10.5%
- Tax rate between 23%-24%
Reaffirming Full Year 2021 Financial Outlook and Key Assumptions
- Net Sales estimated to increase 9%-14% vs. prior year
- Favorable foreign currency translation impact of approximately 2% of Net Sales
- Irrigation segment sales estimated to significantly increase 27%-30% vs. prior year
- In Utility Support Structures, significant raw material cost inflation negatively impacting gross profit margins in the first half of 2021
- No closures of large manufacturing facilities, workforce disruptions, or significant supply chain interruptions
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