Apr 19, 2018 • 09:00 am ET



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Greetings, and welcome to the Valmont Industries, Inc. First Quarter 2018 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded.

It is now my pleasure to introduce your host Mr. Renee Campbell, Director of IR and Corporate Communications. Thank you. You may begin.

Renee Campbell

Thank you, Michelle. Good morning, and welcome to the Valmont Industries' first quarter 2018 earnings conference call. With me today are Steve Kaniewski, President and CEO; Mark Jaksich, EVP and CFO; Tim Francis, VP and Corporate Controller; and Jeff Laudin, Manager of IR.

This morning Steve will discuss highlights of our first quarter performance and a strategic overview of our business. Mark will then provide a detailed review of our financial and operating results followed by Q&A. Our press release was issued yesterday after the market closed and we prepared a slide presentation to accompany our results both of which are available on the IR page at valmont.com. An archive of today's call will be available for the next seven days and instructions for accessing the replay are included in our press release.

(Forward-Looking Cautionary Statements)

I would now like to turn the call over to our President and CEO, Steve Kaniewski.

Stephen Kaniewski

Thank you, Renee. Good morning, everyone, and thank you for joining us. I'd like to begin today's call by recapping our first quarter highlights. 2018 is off to a good start. Net sales were $699 million, an increase of 9.6% over last year. We saw revenue growth across all of our reportable segments with double-digit growth in coatings and irrigation. Overall for the Company, first quarter adjusted operating income was $68.4 million, an increase of 5.7%.

On a GAAP basis, operating income results were $64 million, a decline of 1.1%. Favorable price and volumes more than offset inflation and restructuring costs during the quarter also impacted GAAP profitability. Steel cost (ph) volatility carried into the first quarter. Our historical experience has shown that over time we recover inflationary costs, as all market participants face the same cost increases. We have been proactive in raising prices in all of our business and have remained disciplined in the quality of orders that we've set.

Moving to the operational side of our business, in support of our stated goals to transform our operations and optimize our end-stage structure. We closed Access System facilities in the Asia-Pacific region during the quarter, redeploying capacity into lower cost geographies. We also expanded our shared service model for back-office functions in finance and procurement and completed various actions to streamline cross regional management teams. Along those same lines, we brought our composite facilities in North America under the central led operations management team, supporting our commitment to operational excellence and lean deployment across our sites.

Further, after hosting several lean Kaizen events, we recognized an opportunity to consolidate two manufacturing facilities in Hazleton, Pennsylvania. Doing so enables full utilization of one