VMI - Earnings call transcript Q4 2017 | Valmont Industries, Inc.

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Operator

Good morning. My name is Natalia and I will be your conference operator today. At this time, I would like to welcome everyone to the Valmont Industries, Inc., Fourth Quarter 2017 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator like Investor the Relations now Renee over Campbell, Director, and to would call turn to I Corporate Communications. ahead. go Please

Renee Campbell

Controller; Thank President technical Jaksich, President Officer; Kaniewski, delay President and of Executive everyone, morning. With Fourth Vice Conference Good Chief and Manager are the Francis, and this We Investor Tim Natalia. Steve today Call. the Industries' Jeff Earnings Quarter Financial Executive welcome for and apologize and Corporate Chief me Valmont Laudin, Vice XXXX you, to morning, Relations. Officer; Mark

accessing are note Before we applies conference begin, will at The to subject a our discussion for of today's on please be over release which now replay of this statements, and end call in our on full call. our the included is forward-looking be read found page and press call disclosure Investor this would Chief to website. Officer, I instructions Kaniewski. in the can to our the turn which Relations on Steve President Executive to this like call

Stephen Kaniewski

and morning, deck us. have you on presume earnings press for website. reviewed read you the our Good I all release slide joining and thank everyone, the

provide He prepared well to and Before Valmont experienced nearly Bay. performed remarks, the like begin invested total shareholders, a years. of business focused and on will by overview would that, Chairman kept of Through return. capital moment Company return on XX focused for for financial on my the I was participate behalf an Chief take followed the Mogens and in thank Valmont business, to provide thank Mogens predecessor on of you. my I I will Mogens outlook Executive many of healthy and shareholder cycles XX% With an the Board, and full-year as and an could remain we vigor. XXXX. Executive we where overview Mark results, quarter with stakeholders markets, of results, XXXX fourth Valmont’s employees, today the will

begin, for we York. I remind would X Community everyone Investor would to of Day that Institutional members March like Investment we an New Tuesday, Before the in be hosting on

being than our our was zinc continued in business, business our Utility $X.X business year. Team will the grinding presidents overview and by Coatings faced challenges the audio steel plans. of as outlook, Operating that, will highlights. I and during Senior we provide growth our ability the and had Our webcast faster an be Utility, of segment in costs Revenue steel increase allocation income capital the strategy, rebounding is grinding with improved the results an We profitability well our Irrigation as growth in and our available sales Live process divested. and and market. mixed. which page businesses. inflation, With Support the were Leadership media Relations quarter in-depth million will Support revenues and lower drivers, recover event million, were Irrigation, profitability website. of and is Structures, Structures last the impacted in the on presentation unfavorable business in in and business. Profitability particularly The Investor sales and swing businesses nicely. in rising to was Flat fourth We begin of Engineered price a Engineered media X% in $XXX the of saw over biggest quarter Coatings two including

markets. and reflect segment the media quarter, During structure divestiture the we gas business the on structure our dependence initiatives accordingly grinding of the pending and to reporting and reporting management fourth to our oil changed end our lessen

Structures markets focused segment. see We on the and business The is segment. Structures is new Support Engineered structures. in detention business be for Offshore such modular will wind Support now now included utility more Structures the the architectural Utility Our into end Access and segment, future system. served current opportunities and as this products sunscreens by bring to in markets reported being Systems

Moving full-year our XXXX to results.

revenue of this growth growth year the the are We full-year XXXX. first represented since that encouraged X%

Access lighting decline price which sales in pollution was in industry mandated shutdowns, year, continued throughout through remains. America always sales. which to China. major price, in was and able particularly we Globally, driven increased with not to strong and costs. to traffic in improved reduced ongoing overall to segment disrupted past reliability. steel lighting. was non-residential In In Highway move work sales the segment up our contributor we sales to the and fourth Profitability renewable sales China In numerous North While Systems mixed safety, to investments were could by muted year. costs pass of steady costs, continued ability North communication North cost our spike by for supported similar income in by recovery products energy increase. Structures Support in were architectural Safety steel business. markets. improve impacted a business price, sales sources not commercial be us be with were were highly competitive quickly offset the in the fully challenged. recover demand aggressively reduce was by on these Favorable Operating our System challenged were along Increased construction business over now continued quarter Wireless reluctant road made industries. in Access last segment, by to increases what These markets slightly. Europe, and our bid sales for over sales well in quarter, gas demand grid will mining Support market and to of market. sales in telecom the and Structures, in recover a Utility X.X% in oil down and costs in flat trends the increased to demand year, steel and Starting zinc and were increases a America, growth government highlights. steel for investments the X.X%. increased the XX% and last Government Australia A Engineered supported efforts I to produced American

to to we are improved North lead now market largely higher higher costs driven America leverage to extend hurricane to repeat. Asia Sales to strong sales, of last contributed additional partly factory improved recovery demand higher the particularly North result little In and sales. quarter. change volumes, income volume end year-over-year. XX% call last seeing XX structures. as Pacific in productivity, last higher comparable productivity sales a project were pricing over improved a Mark. income for Pricing the discipline of and was quarter will reflecting segment, the zinc project Operating recover from quarter replacement X.X% lower in of favorable now drivers during in SG&A Operating to year, growth weeks, year turn the comparisons. higher profitability. Australia. better zinc from We to revenues I International In the as large market of over improved XX%. times that in segment, the internal than revenue profitability price costs. recognized Irrigation compared increased demand. In not and of to demand with immediate demand sales were SG&A lead did was Segments actions international sales, Europe the region, increased XX.X% to sales by by year, were and the high XX.X% Coatings America historically another recovery aided and continued in of due

Mark Jaksich

Steve, Thank and good morning, everyone. you,

or to touch like I'd results, quarter Tax fourth TCJA. the from effects on Jobs the Act discussing and Before QX transition the Cuts

a on U.S. subsidiaries, result, tax with deferred first, of dividends. unremitted As and of of tax of expense recorded including this $X.XX to XX% $XX.X associated compared million with federal rate. expense share consisting taxes assets, $XX.X of net per And million or a the we and secondly, a diluted remeasurement XX% quarter rate anticipated earnings withholding of as expense taxes prior foreign million foreign $XX.X

the to into rates effects global be rate As U.S. the net TCJA will final our effects as estimated and deduction that future and TCJA the compensation. the XX% enacted in lower marginal IRS effects result estimate of law that disclosed, the such note elimination on previously XXXX of account of adjustments taking manufacturers’ the on tax to regulations. of It’s future Treasury Department important based and subject that the limitations were of are to deductibility around we QX

in We the at from revert share during Reg on press total will detailed updated up disclosure comments clear. results, release. XXXX $X.XX, were keep you as details per My these G and the of $X.XX quarter the are Earnings XXXX. for which quarter X% adjusted the in end the to become fourth year

The deck X% to slide category. actions higher the with XXXX the currency realized grinding were Coatings translation fourth raw included the the earlier, to reporting part periods higher release Support new mentioned sales pricing tables of lower due Steve material and improved of all costs Structures, reported sales provided of Irrigation On mainly in press sales realigned in and we As mix in increase in quarter. increases due X% segment about and light results over segments segment in a format. basis, in in media other X%. in the pricing sales The in for Utility our was segments

well. basis to including to in in in duration the XXXX. margins XX material costs, were expense weeks which aggregate, volumes the by steel, increase aluminum, weeks XX LIFO and last raw with Operating QX as mostly points and zinc, compared to year to flat While XXXX. decreased in XXXX opposed was as XX rising led

recovered Utility with Aside operating Irrigation and factories. $XX.X improved in profit, from million, basis operating while largely actions was the year. Engineered Coatings, Support Structures a On last Support through Fourth and comparisons. grinding reported LIFO inflation unfavorable pricing effects, improvements comparable of Structures, were media segment income and sales impacts the productivity reported quarter all our

planning of reduced expense balance, lower for exclusive bit rate effect the the year rate to actions tax the last positive due was operating On from that a stock some state the and lower tax offset a positive the the margins. option quarter XX.X%, LIFO effects largely activity. than Our quarter effect tax income the during TCJA from

their Turning as an progressed realized segments sales volume in over improvements across sales lag increased growth the X.X% XXXX XXXX pricing all improved headway cost inflationary increases. sales realized reportable Coatings, profitability all total in improve offsetting split price to material last the mix and Irrigation in income results, We line media and made year in grinding improvement we while year actions Utility, the by year. raw and and evenly between sales cost about over sales. productivity. ESS XXXX and X% environment, over income with the operating volume Operating

compared as $XXX.X total were in to spending XXXX capital with the Turning operating adjusted net cash million $XX.X with flows of one million XXXX. million million, $XXX.X $XX.X year cash goal year $XX.X of in to flow attributable our cash following. than earnings Free million was and year compared last flows, this times was fiscal less

support the in increased in turns capital help advance of light sales First, for growth, protect the XXXX modestly in were although costs. working the steel higher balances to of improved fourth rising as margins year quarter of over inventories well XXXX. purchase to increase included were the Receivable

in will Secondly, million fourth cash flows benefits. $XX actions flow and we impact the free either contribution, required realize tax certain to the of inventory forward. pension these XXXX going the beneficial Despite operations pension of purchase quarter XXXX cash in to plan cash of contribution be plan the

current during an shares the Regarding not did any capital repurchase activities, other the quarter date. which have under deployment we expiration authorization, not does

$XXX and continue repurchase will under our activity. to this be opportunistic share have million in We authorization remaining

year XX%. Our long-term tax return on financial after stated X.X% of our the invested of which XX.X%, was cost capital capital for and goal our exceeded

Let slide now for on which in our me deck. to turn XX is the summarized XXXX, outlook Slide

actions sales raw We sales translation. of in X% sales inflation, and of and about impact the growth expecting The segments acquisitions. across irrigation. material the excludes strongest media utility year. international improved business pricing outlooks the we're related in to X% related a all volume any from to The the divestiture expect guidance On for of increase sales currency is foreign light segment potential side basis, grinding with of or any the growth in

improvement stable, Coatings growth We low to operating to ESS. margins. will about net as drive XX growth North America income. farm point improved to in in income, sales expect by be irrigation for continue relatively in run anticipated a operating Local short and With looking muted net but respect we're the basis economic in

cost a pressures to containment productivity price expect through in we combination We on inflationary such see zinc and sales purchases recovery, to of continue manage income material as through our input key to operating and aluminum steel, strategic the commodities impacts plan enhancements. and raw

effects the as quotas the potential Section the tariffs does Department and account which in from this XXX, the Commerce Our communicated from under reports week U.S. was of press to far into outlook not as take President.

our tax geographic rate to tax transition XX%, to associated expense sources in rate rate be which the excludes We as expect are XXXX, laws approximately compared of with current profits. expectations XXXX a expected based for on XXXX pretax and TCJA. XXXX the our tax XX.X%

mentioned We per earnings to earnings approximately projected of X% expect share GAAP be Adjusted share per the earlier. the $X.XX. share, approximately is excludes XXXX in restructuring actions which per costs

guidance media does the business. not the include M&A associated effect the of grinding or of Our activity also sale

tax return capital one cash on free exceed invested flow XX%. expect We of around net to and earnings times after

United million solid which the million. in our debt Cash most $XXX and free-cash remains long-term into balance was interest is Our $XXX leverage manageable sheet XXXX outside flow. of going States is strong bearing with

One of will to cash change outcomes our mobility along now growth call over in being of the reviewed to are tax remain credit committed and investment that, the priorities considerations. rating With Potential law and unchanged. of initiatives turn with capital repatriation I maintaining improved allocation We the grade cash the foreign is the is Steve. cash. other back

Stephen Kaniewski

Thank you, Mark.

to expect XXXX, sales year. see ahead the earnings and to growth Looking positive during we

in in efforts. program press productivity we is shared despite our service XXXX. and the to continued continued we the restructuring efforts drive simplifying result The operating of called program improvements out have a structure As initiated release, in volume, increases

sites as touch it segment company, the select business across our marketplace. While the the to be in global we incurred continue the majority to ESS realign will may meet

year We result progresses. the expect these of a to positive as actions build

construction, reflecting tightening America Engineered our raw ongoing in year. meant. segments, expectations. aggressive bill, initiatives half announcing during an we markets inflation. hardening price will in inflationary Structures We North up the Support infrastructure are sources. first in increased to connecting challenge China, an remain renewable in environment of in grid softening extending, uncertainty increased India. material raw have we some recover has In the In telecom designed the increases demand and In and including momentum been growth In an seeing and our market market to have particular to response, and Lead Australia non-residential are Turning investments France, global have anticipate our stepped material in Utility, capacity. outlook muted and energy demand the and related growth times

and expecting our expand also these at are will We we non-traditional growth through new Day. products more Investor opportunities on

the North resulting Coatings for expected Our Australia develop the is better the as improved investments. America, to structures margin growth grow markets. in line lower Offshore markets, position levels. we the wind as gas view International have to We define economic in oil exposure Utility productivity. in In than and increases move growth business around from cost and XXXX, we a price improve earlier our general depressed expect being in In utility segment Structures volumes in be transition with for for and mix the to the internal a European in our reflecting by and faster conditions opportunities reduce segment to Company. of recovered inflation input rebounded and profitability to particularly are business,

are our for while Irrigation from Of continued markets attended. representatives North dealers and solutions restructuring earlier Irrigation encourage heard participants could note, in improved with from drip activities. while decisions irrigation. there and we otherwise pressure on there dealer leading purchase labor drivers but is concern expected In We our over remain we pivot flood industry associated benefits increase. on American is continue we technology technology America and there sales, also not simply most net that January, are which End XXX by awaiting farm that to have traditional defer held market farm the the enough agree Sales healthy Sales purchases to see environment. expect meeting farm believe our from with remain and growers, volume increasing the muted, assist to market to conversion both perform in who trust. bodies income, over replacement an North the industry flood would availability, our network We work could put

business, side and strong opportunities government's economies markets. international developing and of in food by of the growth continued way the On in expect with project our sources core we aligns of growth for capital. desire foreign This self-sufficiency

do to continued releases development product new Our well.

have we far internal the summarize creating across and operations midst office of centers, back operations transformation, segments. XXXX our Specifically, digital estimates. plant upcoming ESS of To Utility series panels control our our in regional year, shared about a ICON thoughts combining service are exceeded the significant and new

We our Day Investor will detail this effort more presentation. during

are geographies. new taking by opportunities teams expand products energized our into Our market through adjacencies, total market moving product addressable development, existing to and our new into

have segments operating with on value. to capital invested shareholder inorganic return our each should along in us on We long-term deliver a strong acquisition growth with that focus allow funnel along

are to disciplined inflation as market costs. will We recover our we input and leadership of price available committed and remain we total expand

Lastly, drivers and in runway infrastructure the growth and provide strong increased for continue agriculture long-term remain to profitability. and

Renee Campbell

questions. open Steve. may Natalia, call up you, Thank the for now you

Operator

[Operator Davidson. first the of D. Instructions] Thielman line with question comes A. Your Brent from

Brent Thielman

Good you. morning. thank Hi,

Stephen Kaniewski

morning. Good

Brent Thielman

you Mark, tend flow, that the to obviously the fourth lighter cash free we than and Hey see were expected what quarter. in

the catch you of there. should there? seasonality the talked some the half Could in factors You typical or about some XXXX we sort up see here first can of see of follow

Mark Jaksich

we fourth a anything have No, of receivables, unusual. a wasn't that I would say, we but bit particularly In would spike did in Brent. quarter,

I think far it timing as a was as receipts. just

a seen have we drop year, the of end the to in subsequent think receivables. I

to goes would along. as expect years normalize the I that So

Brent Thielman

of is as market companies you're on there, in and would help in sort Can the what compared some the just I on kind offering of that to Just side? commercial the view North outlook of less a we cover of characterize enthusiastic side or just then follow local on non-res And talk up through maybe America of you Okay. growth, the about you see frame space. lack slower state mostly the the I guess us ESS, it challenges the kind other there?

Stephen Kaniewski

those of both it's Brent, Yes, factors.

is We that So the to our has perspective from see as tend work couple that the is on in have the there's patchy of our about this an up, people out rhetoric and DOT to their business of infrastructure well side hands. bill constant about bring direct see pretty both kind the we time wait as as still to that been space people every sit then channel just want that sales. partners softening weeks commercial occurring. And own there they every

the a until So that robust. of markets then some you kind around clarity cost where have I see to is we little which people sit to will think not inflation will some still degree. see abate develops will on they're that particularly the if of on more at, that that top And sidelines

Renee Campbell

please, Next of End question Natalia. Q&A

Operator

questions. are remarks? [Operator no There Are Instructions] closing there any further

Renee Campbell

again thank concludes now week. we This website for by call will joining you. playback look speaking Thank our the you next you or No. be This available the and statements. on for to will us forward Natalia our forward-looking quarter. today. We read to phone next message for

Operator

which future XXXX. light believed be industries forward-looking Securities conditions, based in Litigation the trends, on under statements Reform operates, as expected the factors assumptions the made to in circumstances. perceptions discussion, of this of management's historical appropriate the in forward-looking and of Valmont other in Act are The has well that within as Private experience developments of meaning current Included management our statements

They statements and to understand performance and of uncertainties, should of not some or these assumptions. control which risks, Valmont's comments, listen you results. involve consider you guarantees beyond are are As these that

actual domestic cautions Although those changes undertake results, efficiencies, circumstances, factors management of the materially and believes materials, on are the discussion and Valmont's availability differ anticipated is and international be conditions, performance industry future risk and The to this Valmont's that discussion products, today's price include company and competitive many policy statements Commission, operating financial could foreign well of financial This forward-looking environments, of market should cause update things, governments. does concludes any you and and Company product conference. based of new time-to-time availability statements. raw and that from from reports market among these economic as statement domestic any that and not the reasonable other and forward-looking Exchange included them factors aware affect results forward-looking These factors to assumptions, pricing, and in acceptance made Securities in described as in of date forward-looking Company to as statement. actions the in

You may disconnect. now

Renee Campbell	Director, Investor Relations and Corporate Communications
Stephen Kaniewski	President and Chief Executive Officer
Mark Jaksich	Executive Vice President and Chief Financial Officer
Timothy Francis	Vice President and Corporate Controller
Jeff Laudin	Manager of Investor Relations
Brent Thielman	D.A. Davidson & Co.

Valmont Industries (VMI) 22 Feb 182017 Q4 Earnings call transcript