Valmont Industries, Inc. (Valmont), a US-based manufacturer of engineered support structures for infrastructure, has reported sales of $455.2 million for the first quarter of 2009, compared with the sales of $422.3 million in the year-ago quarter. It has also reported net earnings of $35.9 million, or $1.37 per diluted share, for the first quarter of 2009, compared with the net earnings of $29.7 million, or $1.13 per diluted share, in the year-ago quarter.

First Quarter Segment Review:

Utility Support Structures Segment (39% of 1st Quarter Net Sales):

Steel and concrete structures for the North American electric utility industry.

Sales increased 74% to $176.0 million compared with $101.2 million in 2008. Sales grew due to very strong demand in the North American utilities market and shipments of some large orders. The timing and size of shipments in this segment can fluctuate substantially and the company cautions against annualizing quarterly trends. Driving sales growth is an increase in investment by utility companies in the electrical transmission grid. Following a period of underinvestment, utilities are adding transmission capacity to improve reliability. Valmont participates in this build-out by providing engineering and manufacturing expertise for transmission, distribution and substation structures.

Mostly due to better fixed cost leverage on increased volumes and a favorable mix, operating income grew to $39.0 million and was 22.1% of sales.

Engineered Support Structures Segment (30% of 1st Quarter Net Sales):

Structures and specialty structures for lighting and traffic, wireless communication and overhead signs, worldwide. Includes utility structures outside of North America.

First quarter sales were $158.4 million, an increase of 6% from $149.4 million in 2008. The impact of acquisitions made during 2008, plus an increase in inter-company utility sales helped offset lower global demand. In North America, a weak housing and commercial construction market lowered commercial lighting product demand. The company believe lighting and traffic product demand was lower due to uncertainty over federal stimulus programs and concern over state and local budgets. In Europe, sales were sharply lower in France and Eastern Europe due to a weaker economy, partly offset by stronger sales in the rest of Europe, despite an economic slowdown.

Specialty structures sales were flat in North America and higher in China. Utility product sales were lower in China.

Operating income declined 20% to $8.1 million or 5.1% of segment sales. The decline in operating income was primarily due to lower sales volumes in global lighting products, offset by the impact of acquisitions. Overall margins were also impacted by greater sales to Valmont’s Utility Support Structures Segment at intersegment margins. Additionally, factory productivity, startup costs for a new mid-size pole plant, and competitive pricing pressures weighed on margins.

Irrigation Segment (23% of 1st Quarter Net Sales):

Center pivot and linear move mechanized irrigation equipment and parts for agriculture in global markets.

Sales fell 21% to $103.1 million compared with $130.8 million in 2008. Global demand for irrigation equipment was weaker than the record first quarter demand experienced in 2008. Globally, the company believe customers weighed uncertainty over the economy, lower crop prices and mixed signals over the direction of input costs for the upcoming planting season and curtailed investment in irrigation equipment. In addition, the impact of credit availability impacted sales in some international markets.

Operating income declined 46.4% to $12.0 million. However as a result of good cost management, operating income as a percent of segment sales remained double-digit at 11.7%. Lower volume and de-leverage of operating costs were the primary reasons for the decline in operating income.

Coatings Segment (5% of 1st Quarter Net Sales):

Hot-dip galvanizing, anodizing and powder coatings to protect against corrosion of steel and aluminum in North American markets.

Sales of $30.0 million were 14.6% below last year’s $35.1 million. The sales decrease reflects lower pricing as a result of a reduction in zinc costs and reduced demand, mainly in the agricultural and recreational industries.

Operating income dollars declined 8.5% to $6.0 million and was 20.0% of segment sales, an improvement of 1.3 percentage points. Good control of costs led to the improvement in operating income percent despite a decline in volumes.

“A substantial increase in Utility Support Structures Segment sales, combined with a modest increase in Engineered Support Structures Segment sales more than offset lower sales in our other segments,” said Mogens C. Bay, Valmont’s Chairman and Chief Executive Officer. “Our irrigation customers reacted to uncertainty in the global economy and significantly lower commodity prices by purchasing substantially less irrigation equipment. Weakness in the general industrial economy lowered demand for coatings services.

“Utility Support Structures margins improved with the increase in volumes and good operating leverage. In the Engineered Support Structures Segment, margins weakened due to an unfavorable sales mix and competitive pricing pressure. Additionally, margins in our Engineered Support Structures and Irrigation Segments were pressured by manufacturing de-leverage due to lower volumes. Despite lower volumes, Coatings Segment margins improved due to good cost control.”

“Despite these challenges, first quarter operating income increased and operating income as a percent of sales was 12.8%, an improvement of 8 tenths of a percentage point above last year’s record first quarter levels.”

2009 Outlook:

“We are cautious about our outlook for the balance of 2009,” Mr. Bay said. “In the North American utility market we expect higher annual revenues. In the Engineered Support Structures Segment, the immediate stimulus in North America is not targeted at projects that will impact Valmont’s revenues, and in general the European market remains weak. The bigger long-term driver for the business in North America will be the renewal of the U.S. Federal Highway bill expected this fall. In the Coatings Segment, we expect revenue declines to reflect weakness in the industrial economy. In the Irrigation Segment, despite farmers’ relatively sound financial position, we expect continued weakness throughout the year with significant unfavorable second and third quarter irrigation comparisons with last year’s record performance.

On balance, at this time we expect total revenues and net earnings for 2009 to be only modestly lower than 2008 levels.”