Valmont Industries, a global provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, today reported financial results for the third quarter ended Sept. 25, 2021.
Third Quarter 2021 Highlights
- Record Third-Quarter Net Sales of $868.8 million, an increase of 18.4%, with growth in all segments led by significantly higher Irrigation sales
- Operating Income improved to $76.2 million, or 8.8% of sales ($80.4 million or 9.3% adjusted) compared to $61.5 million or 8.4% of sales last year ($67.1 million or 9.1% adjusted), despite ongoing inflationary pressures and supply chain disruptions
- Diluted Earnings per Share (EPS) improved to $2.40 ($2.57 adjusted) compared to $1.84 ($1.99 adjusted)
- Record global backlog of more than $1.5 billion, an increase of 35% since the end of fiscal 2020, reflecting improved pricing and continued strong market demand
- Raising the bottom end of full-year GAAP diluted EPS guidance to a new range of $10.10 to $10.60 (Adjusted diluted EPS to $10.60 to $11.10).
Irrigation Segment (27.7% of Sales)
Center pivots and linear irrigation equipment for agricultural markets, including parts, services, and tubular products, and advanced technology solutions for water management and precision agriculture
Global sales of $240.3 million increased 72.6% year-over-year, due to higher volumes in all markets, particularly Egypt, North America and Brazil, favorable pricing, and higher technology sales.
North American sales of $116.3 million grew 53.4% compared to 2020. Sales growth was led by favorable pricing, higher volumes due to continued strength in agricultural markets and higher industrial tubing sales.
International sales of $124 million nearly doubled year-over-year. Sales growth was led by continued strong demand, including deliveries of the large Egypt project and higher sales in Brazil, Africa and Europe.
Global backlog increased 26% year-over-year to $388 million, demonstrating the underlying strength in agricultural markets globally.
Operating Income improved to $27.7 million, or 11.5% of sales ($32 million or 13.3% adjusted) compared to $14.7 million, or 10.6% of sales in 2020. Profitability growth was driven by higher volumes, favorable pricing and improved operational efficiencies, partially offset by SG&A expense from the recent Prospera acquisition.
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 experienced no significant supply disruptions, and has been able to continue procuring raw materials and components critical to its operations, including steel, aluminum and zinc. Other supply constraints have been largely mitigated by effectively utilizing the Company's global footprint.
Valmont monitors health advisories on a continuous basis and will continue to follow CDC, WHO and local guidelines to protect the safety, health and well-being of employees, customers, suppliers and communities.
2021 Financial Outlook and Key Assumptions
The Company is raising the bottom end of its full-year diluted EPS guidance range and reaffirming key assumptions for the remainder of 2021. GAAP diluted EPS is now expected to be $10.10 to $10.60 and adjusted diluted EPS is now expected to be $10.60 to $11.10. Full-year Net Sales growth is expected to be 17% to 18%, and Irrigation segment sales growth is expected to be 50% to 53%. The revised guidance reflects the Company's year-to-date results, strength in global agricultural markets, continued favorable end-market demand across all businesses and expected recovery of cost inflation.
2021 Key Assumptions
- Favorable foreign currency translation impact of approximately 1% of Net Sales
- Fourth quarter tax rate of approximately 24%
- Capital expenditures to be in the range of $110-$120 million to support strategic growth and Industry 4.0 advanced manufacturing initiatives
- No pandemic-driven closures of large manufacturing facilities, workforce disruptions, or significant supply chain interruptions