Valmont Industries Inc (VMI) 2012 Q4 法說會逐字稿

Good morning. My name is Jody, and I will be your conference operator today. At this time, I would like to welcome everyone to the Valmont Industries, Incorporated fourth-quarter earnings conference 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.

(Operator Instructions)

I would now like to turn the conference over to Mr. Jeff Laudin, Manager, Investor Relations. Please go ahead, sir.

Thank you, Jody. Welcome to Valmont Industries' fourth quarter 2012 earnings conference call. With me today are Mogens Bay, Chairman and Chief Executive Officer; Terry McClain, Senior Vice President, Chief Financial Officer; Richard Heyse, Executive Vice President; and Mark Jaksich, Vice President and Corporate Controller.

Before we begin, please note this discussion is subject to our disclosure on forward-looking statements, which applies to today's talk and will be read in full at the end of the call. The instructions for accessing a replay of the call can be found in our press release. I would now like to turn the floor over to our Chairman and Chief Executive Officer, Mogens Bay.

Thank you, Jeff; and good morning, everyone. Thank you for joining us. I trust you have all read the press release, so I will focus on some highlights for the quarter and in general.

The quality of our earnings improved significantly, with operating income as a percentage of sales going from 10.3% to 13.7%. Leading the increase was very strong performance in our Utility and Irrigation Segments, coupled with some improvement in our Engineered Infrastructure Products Segment. Our Coating Segments continued to operate at very satisfactorily profitability levels, but results were down slightly from the year before.

Our Utility business had a very strong quarter, benefiting particularly from continued high levels of investments by the electric utilities in North America. Our international utility business also saw significant improvement in sales and earnings. Backlogs at the end of December were a record $434 million, ensuring a good start for the current year. The high profitability level of this segment in the fourth quarter does not guarantee that we will see that level each and every quarter going forward. This business is, to a great extent, a project business, and profitability levels may vary from project to project.

We anticipate that the Utility business will continue very strong for a number of years. We have not seen utilities pull back on their significant transmission, distribution, and substation spending plans. To meet this increasing demand, we have added significant capacity in this segment. During 2012, we expanded our Monterrey, Mexico; Hazleton, Pennsylvania; and Tulsa, Oklahoma plants. And, we started up a new plant in Pune, India. We also expanded an engineered infrastructure plant in Texas to handle additional inter-company volume for the Utility Segment. We have a new plant under construction in Tulsa, Oklahoma, and we are retrofitting the recently acquired large facility in Columbus, Nebraska. Our global network of pole plants capable of producing large poles is unrivaled in the industry, and we have access to additional capacity in our China and India operations, if necessary.

We have seen tremendous SG&A leverage in our Utility business over the last couple of years, maybe too much. We will be adding people to this organization to further strengthen our ability to serve our customers well. Also, over time, we believe our international markets will present significant opportunities for our Utility segment, and we will be making additional investments in market development efforts around the world.

Our Irrigation segment ended the year on a high note with another very strong quarterly performance as farm income levels and drought concerns continue to add energy to this business. At year end, we typically do not have a very large backlog, but this last year was different. Our backlog of more than $230 million in this segment is very atypical, but a clear indication of the strong positive environment we are experiencing currently in this business. This certainly will indicate that the rest of the irrigation selling season, which is the first two quarters of 2013, should be strong. I don't think we are in any business with stronger long-term global drivers than our irrigation business.

The increasing demands worldwide for food production to meet the needs of a growing population, and in many places better diets, will put tremendous pressure on the way production agriculture uses water. This does not mean, however, that this business will not be cyclical any more. Short-term drivers such as farm income, growing conditions and general economic conditions, as well as government policies, will influence the environment for this business also going forward. But the trend line, I have no doubt, will continue in an upward direction.

The profitability of our Engineered Infrastructure Product Segment continues to be unsatisfactory as a result of downward pressure on public spending in many parts of the world. The businesses within this segment in the Asia Pacific region, access systems poles and highway safety products are operating quite well, but our businesses in North America, and in particular in Europe, continue to be under tremendous pressure. All these businesses are profitable, however, just not to the extent these businesses have been, and will be capable of, in a better external environment. So, we continue to focus on what we do control -- improving the way we run these businesses as we wait for market conditions to improve.

Our Global Coatings businesses continue to operate well and at a high level of profitability. These businesses, for the most part, will grow with the general economy. During the current quarter, we experienced the weakened in demand in Eastern Australia, which led to this segment's slight decline, compared to the fourth quarter of 2011.

Since we last spoke, we have closed on two acquisitions. In December, we acquired a premier Canadian galvanizer with three locations, and this is our first move into the strong Canadian economy for our Coatings segment. We continue to see coatings acquisitions, in particular, galvanizers, as core to our growth strategy. Last week, we acquired the Locker Group of Australia. This company had three main product lines -- access systems, perforated and expanded metals, and screening media for the mining industry. The Locker Group gives us complementary products and geographic footprint to our Webforge line. The Locker Group operates three manufacturing facilities in Australia, one in India, and a small facility in China. While we already have significant concentration and therefore exposure to the Australian economy, we feel that the Locker Group acquisition will strengthen the access system businesses we already participate in there.

Turning to other financial measures, the tax rate for the quarter was higher, mostly reflecting final adjustments related to the 2011 legal reorganization. Our rate for the year was 35.2%. Our expectation is that long-term tax rates will be between 33% and 34%. The impact of currency translation on operating income this quarter was minimal. Inventories increased, compared to last year, to support higher sales levels. Depreciation and amortization for the quarter was $18 million, and capital expenditures were $38 million. For 2013, we expect depreciation and amortization of about $70 million and capital spending, for the year, to be above maintenance level, as we invest in capacity to support growth in our businesses. We expect a modest increase above the $97 million invested in 2012.

For the year 2012, we saw increased sales, increased profitability, and improved quality of earnings in every single segment, including the Engineered Infrastructure Segment, where earnings increased more than 25%, despite a very difficult environment in many parts of the world. Our operating income, as a company, grew from 9.9% to 12.6% of sales, reflecting good operational performance and leverage.

Looking towards the remainder of 2013, we expect continued strength in our Utility Structure segment with increased revenue, increased earnings, and better quality of earnings. The current environment for our Irrigation segment is as strong as I have ever seen it, which should lead to good performance in this segment at least for the first two quarters of 2013. As you know, come summer, growing conditions in the Northern Hemisphere, commodity prices, and farm income expectations will determine the strength of the next selling season, which starts in the fall. We expect our Coatings Business to continue to operate at high profitability levels; and whereas, we do not anticipate a significant change in the market environment for our Engineered Infrastructure Products segments, we expect continued improvement in their earnings as a result of internal efforts to improve productivity and some additional revenue. In summer, we expect at the current time to deliver another record in 2013.

Before I take your questions, let me acknowledge that this is the last conference call for our CFO, Terry McClain. For the last two decades, he has been my partner on every call with you, and I want to take this opportunity to publicly thank him for his significant contributions to Valmont's success over many years. We will now take your questions, thank you.

(Operator Instructions)

Julian Mitchell, Credit Suisse.

It's Charlie for Julian. On the Utility Support Structure Segment, I was just wondering, it seems like you've done a lot with capacity from 3Q to 4Q, with sales going from about $215 million to $250 million -- just didn't know what inning you're in, in terms of adding capacity, and what we should see going forward?

As I have said in the past, a good number to use, and plus or minus a little bit, is that every year for the last couple of years we have added about $100 million in capacity. I think we will have probably another $100 million of capacity available in 2013, compared to 2012, and we'll probably have another $100 million on top of that for '14 compared to '13.

Some of the investments in additional capacity are now online -- Monterrey, Mexico; Tulsa, Oklahoma; I think Hazleton is about there. The new plant in Tulsa, Oklahoma, will not be online until towards the end of the year. We will see some capacity out of the Columbus, Nebraska, facility, but that is really also capacity more geared towards 2014 and further.

Okay, thanks. I'll hop back in.

Nathan Jones, Stifel.

Congratulations on another good quarter. Terry, good luck for the future.

Thank you.

Mogens, when you and I sat down a few months ago, you talked about a 15% margin expectation in the Utility Support Structures business and put a range of 13% to 17% around that, depending on mix and length of production runs, et cetera. You just put up an 18.7% margin, which hasn't been seen since you were getting to mark up steel back in 2009. Can you give us some more color on how you achieved this margin in the fourth quarter, and what the potential is to repeat those margins, or close to them, in even one quarter next year?

I addressed it in my talk, as you clearly picked up on when you said, in even one quarter next year. I can't promise you that we will not retain that in one quarter of next year. But, as I said, looking at the fourth quarter, we had some good projects come through, we had good productivity, we didn't have any major issues we had to deal with, and then we get very good leverage.

Going forward, I think that I have said that in basically good markets, we should count on mid-teens operating income. I think that's still the case. But, when things go well and we have good projects going through, we can be slightly above that, as you saw in the fourth quarter. But, I'm not expecting the year of 2013 to run at 18.7%.

Are you expecting the year 2013 to be above that 15% expectation that you laid about previously?

Yes.

Okay. Thanks. In Irrigation, with the backlog up 140%, could you talk about how you think revenue is likely to progress throughout the year? Your major competitor has talked about demand being pulled forward earlier in the year as customers are concerned about actually being able to get product. Are you seeing the same thing?

I will say that the industry probably is basically sold out, and I will say that the -- what I would call, the tsunami of orders coming in towards the end of the year, is probably reflecting some concern. But, it will take a while to get through that backlog. We have no concerns that we won't have very strong revenues, and basically, operating at capacity through at least the first four or five months of this year.

Are you considering adding capacity in Irrigation?

We are flexible on capacity, and obviously, we have been adding capacity by becoming more productive and adding more people and adding equipment. We are currently under construction with a second gearbox manufacturing facility. We are the only company in the industry that manufactures our own gearboxes, and we are adding a second facility to keep up with demand in that component of the business. As this business continues to grow over time -- and, as I said, cyclicality hasn't disappeared from this business, but the trend line, I have no doubt, is up -- we will be able to respond to that and add capacity where needed, not only in this country, but also around the world.

Okay, thanks. I'll get back in queue.

Arnie Ursaner, CJS Securities.

First, I will congratulate Terry, and I know you've got a lot of things you are looking forward to doing. And, again, thank you for all your help along the years. My first question relates to corporate expenses. Obviously, it had a pretty good jump. What in that might be nonrecurring, and how should we think about a run rate on corporate expenses for the upcoming year?

Arnie, I'm going to turn that over to Mark Jaksich, but I know we can always count on a question from you on corporate expense, so I'm sure he's prepared.

Good morning, Arnie. Really, what drives that corporate expense number quite a bit is incentives. Not only -- and really, in particular, it's the long-term plans, and the movement of the stock price, and how that affects the expenses in that plan. As you know, the stock price went up quite a bit during the fourth quarter, and so that resulted in some additional expense. And I think in the past, we have always indicated that we would be around $12.5 million to $13.5 million in a quarter at normal targeting incentive rates, and that still remains to be the case.

That's what I was trying to get to. Obviously, you can't control where your stock will be, but when it does do well, it dramatically affects your long-term comp plan, which is what you're indicating it did. My other question relates back to the utility business. The $434 million in backlog is roughly about 0.5 year of revenue, but it sounds like you're increasingly confident, not just for the balance of this year, but well into 2014, and maybe even 2015. Can you talk a little bit more, Mogens, about how we should think about the backlog, relative to the way orders come in? And, why you do have the confidence to expand capacity in this area.

First of all, I did mention '14, and you added '15. This is a way to look at it -- the orders that are in the backlog numbers that we announce are orders that are firm orders, delivery time established, final designs done, we know when to deliver, et cetera. We have visibility to orders that we know that are going to come in, that we are working on, we have been awarded, but it isn't -- the paperwork isn't finalized. So, we are very confident that we will have no problem filling up this year.

When it comes to 2014, we look at and talk to our utility partners as to what their plans are. And, at the current time, we check -- or we follow mostly large projects. There's a lot of small projects going on, but the larger ones are the ones with the most visibility. When we look at the number and size of large projects in '14 that we can see now, compared to what we know what's going to happen in '13, that number is up. That's what gives us confidence for 2014, too. That's based on the current environment and the thinking of the utilities, and who knows what happens between now and then, but that's the only thing we have to go on.

A clarifying question, if I can. You have been impacted in the past by some lower-margin work that you had taken on when demand wasn't there, and you have talked about it impacting results. Is all the lower-margin work that you had taken on, essentially, out of -- is it finished and moving forward? And, can you speak about pricing trends, given the tightness on the new work you are taking in?

To your first question, I would say, yes. The orders we had identified that were at low margin have all been finalized and delivered. Pricing environment has been a little better, which is reflected in our better performance lately. Now, this is also an industry that's attracting a lot of new interest, players that are adding capacity, and we don't control pricing; but, in general, the environment is better today than it was one year ago. And, unless we get too much capacity added to the industry and not enough discipline in pricing into this industry, I think we should continue to see the environment we are in right now.

Thank you very much.

Schon Williams, BB&T Capital Markets.

Let me also add my congratulations on the quarter, and thank you to Terry for wonderful years of service. I'm looking forward to reading that history of Valmont book one of these days.

Thanks.

Let me just start off with Irrigation. Incremental margins, obviously, you're talking about running near the top of capacity utilization for that segment, but incremental margins in Irrigation have been running north of 50% in the back half of 2012. Can you continue to put up -- should we be looking for 20%-plus operating margins, based off of 50% incremental margins for that business? Or, help me think about what's driving that significant year-over-year margin expansion -- are you getting some juice on pricing? What should we really be looking at there?

I think a lot comes from mix, and a lot comes from North America versus international. I would say that we are very pleased with the kind of operating income percentages we have seen lately in the Irrigation business. I do not count on 20% operating income in this business going forward. Does that mean it couldn't happen for a quarter? No, that's possible; but again, it comes down to mix. I would say if we can hang on next year to the same type of operating margins that we've had this year, we'll be happy.

Okay, thank you. That's helpful. For the backlog that you currently have for irrigation, you'd expect most of that to get delivered in the first and second quarter of 2013? Or, does it go beyond that?

No, that's all for the first and second quarter.

Okay, perfect. Then, one additional question here -- could you just talk about where we are in terms of the acquisition pipeline? You've gotten a little bit more active here recently, but your balance sheet remains -- you've got plenty of firepower there. Can you talk about what's on the horizon? Could we see something larger, or should I be looking for more of these smaller bolt-ons?

Yes, to all of the above. Actually, we have not become more active, we have just been able to close a couple of acquisitions. As I have said many times, timing our acquisitions is impossible to predict. Our pipeline is pretty robust in all of our business units. When we'll be able to find the right value on an acquisition that fits into one of our segments is unknown. But we are actively pursuing, and I would say, currently, there's nothing that's close to being finalized of, basically, any size.

Is there any one segment or geography that you're focusing on? At one point, EIP seemed to be the focus for M&A. Is that still the focus?

No, I would say that, in all our segments, we are -- we had positive cash flows. We are not -- so we don't have to make decisions that one segment has to fund the growth of another segment. We look at the returns we can get from acquisitions. If we can get a good return in the coatings business that looks better than one in EIP, and if we had to choose between the two, we'd pick the one with the best return, so we are not prioritizing.

We are also not prioritizing between international and North America. We don't have an objective that says that 60% of our revenues should come from outside the US. We have lately seen great growth in North America, particularly in Utility and Irrigation, and we love it. That would mean that the relationship between North American revenue and international is swinging a little bit back towards North America, which doesn't bother us one iota.

All right. Thank you, guys. I will get back in the queue here.

Brian Drab, William Blair.

I will also echo the comments for Terry. Thanks for all the years of helping me get up to speed on the Company and learn about the Company, and congratulations on an excellent career. First question, on the Irrigation Segment -- what's the outlook for the international Irrigation business? And, could you talk in a little more specific way about the pressure that you saw in that business in the fourth quarter, from the international Irrigation?

In the broadest sense, over the last couple of years when we have seen tremendous growth in North America, driven by the factors, as you know, farm income, the additional catalyst being the drought in this country, international has seen growth also, but not to the same extent. There are still many parts of the world where we are doing pioneering work. The concept of center-pivot irrigation is being more and more accepted around the world. There's no competing technology for large-scale agriculture that delivers water more efficiently than center pivots. But, there's still a lot of pioneering work taking place.

I would say, also, profitability internationally, whereas it's good -- it's double-digit operating income -- it's not as strong as in North America, as a result of the additional expense involved, usually receivables go out a little longer, we have to have more footprint around the world that adds SG&A expenses; but long term, of course, the international market should outpace the North American market, but these are really long-term trends. The question of efficient use of water for agriculture is a global issue, and how fast it gets implemented is really up to local governments and local conditions. It's a long answer to a short question, but the future lies around the world.

Okay. I appreciate the long answer. Thanks. Next question is on the Coatings Segment. There's been ongoing consolidation in that industry. You and some of your competitors making acquisitions of smaller coatings businesses, and specifically, galvanizing businesses. Has that contributed to a favorable pricing environment there? Can you talk about your expectations for pricing and margins in that segment over the next 12 months?

The answer to your question is, probably, yes. The more consolidation, the more pricing discipline there may be that in market. Operating at the levels we are now, which is around 20% operating income, is, in my opinion, a very solid level for that business.

Can it eek up a little bit or slide a little bit? Yes. But, I wouldn't expect profitability in that business to move significantly up from where it is today. I think our growth in that segment is going to come from, as you pointed out, acquisitions and from general economic growth.

Okay. And then, just one more on the Other segment. What can we expect for margins there going forward? You had the -- I think the highest level of operating margin in the Other segment since the acquisition of Delta, and I always have difficulty forecasting margins for that piece of the business.

I think you should just, for now, expect that segment to stay about at the operating income level where it is today.

The level that it was for full year or for the fourth quarter?

For the full year. I think for the full year of -- it was about 14% for the full year, and this is up a little bit -- 0.2% from the year before, so I think that's what you should model.

Okay, thank you.

Brent Thielman, DA Davidson.

I guess on the Utility business, trying to get a feel for the revenue run rate over the next few quarters. Obviously, you're growing, but is the $250 million you did in Q4 a base we should think to build off of for Q1, and then ramp through the year? Or, does anything stick out to you, as far as Q4 goes, that we shouldn't be thinking to build off of?

Again, revenue can move a little bit from quarter to quarter. Revenue for the year 2012 was about $870 million-some, and we probably have a good chance of having that pass the $1-billion mark by maybe a little bit.

Okay, I'll circle back on that one. But when you think -- I guess, second question, when you think about your revenue growth forecast this year, are you assuming any acceleration in some of the other segments, I guess specifically Coatings or Other, or is it all Utility and Irrigation?

I think we are seeing revenue growth, slight, in EIP. We are seeing good revenue growth in Utility business. We will see a little bit in Coatings, mainly as a result of the acquisition in Canada, and we may see a little bit in Irrigation. We don't count for a lot in the second half for Irrigation because we don't know yet what's going to happen there. And, that's how we kind of end up with the total numbers for the year. The Other segment pretty flat from this year.

Okay. Thanks. I'll get back in queue.

(Operator Instructions)

David Rose, Wedbush Securities.

I have a follow-up to the international Irrigation questions. In particular, is there anything that we can expect in terms of specific projects that you're overlapping? You called out North Africa in this quarter. Is there anything that's coming up in the first or second quarter of which we should be aware? Secondly, if you can give us a little bit more color on what's going on in the international Utility Support Structure business that drove things a little bit better?

Okay, on the Irrigation side of the business, there's really nothing significant coming up in the next couple of quarters. It's a very broad-based business. In this last quarter, in the fourth quarter, we did have a major project in North Africa in 2011 that did not repeat, but there's nothing particular on the horizon that would skew quarterly revenue beyond the normal broad-based business.

On the international Utility side, yes, the fourth quarter was a good quarter. The quality of earnings in the international Utility moved more than in North America, depending on geography and quality of the projects we have taken. But also keep in mind that the international Utility business, in relationship to the overall Utility business, is very small. I would say, roughly, that North America accounts for about 90% of the business in that segment.

Okay, great. Thank you very much, Mogens.

Brent Thielman, DA Davidson.

On the Engineered Infrastructure Products segment, I guess your Australian Coatings business seemed to see some pressure, though the rest of the Australian business in EIP was stronger. Can you help me understand that a little bit more?

We had one quarter where we saw some softening in Australia in Coatings business, and I wouldn't read too much into it. Our overall business in Australia has been pretty robust, and the economy is pretty good down there, so I wouldn't over interpret what happened in Irrigation in one quarter in Australia.

Okay. Then, just a second question on the EIP segment. As your North American businesses see better demand, I guess specifically in lighting and traffic, will that be a positive impact on margins if it becomes a bigger portion of the geographic mix, or does it matter much from a mix point of view?

No, I would say that, if you look at the mix today, the best profitability in the Asia Pacific region, next comes North America, and after that comes Europe. All three regions are profitable, but if we get more revenue at decent margins in North America, yes, it will improve our quality of earnings in North America, and the same would be the case in Europe. So, the core of your question is, does geographic improvement in North America and Europe lift the overall margins in that segment? And, the answer to that is, yes.

Okay, thanks. Terry, thank you, and enjoy retirement.

Thank you very much.

Schon Williams, BB&T Capital Markets.

I wanted to follow up on lighting and traffic as well. It seems like the macro pieces should start to fall together for that unit, and it sounds like from your commentary, you're maybe being a little bit hesitant in terms of top-line growth. Help me understand -- shouldn't we be seeing -- start seeing some of the highway dollars start to flow into US business? Certainly, state and local budgets look like they're getting a bit better; housing recovery will certainly help that. Should we be looking for that lighting and traffic business to start to accelerate, I don't know, in the second half of '13, or is it more of a 2014 story?

I would say that, in North American structures, we will probably see decent revenue growth this year, and that should follow, then also, decent improvement in the quality of earnings. But remember, the highway bill used to be four- or five-year bills, then we had a number of short-term extensions, and then people got all excited about a two-year bill, but a two-year bill really doesn't do that much for major projects. It may accelerate repair work and minor projects, but utility -- no, not utilities, but communities, whether local or state, they need to have better visibility of that. Now, the President now talks about more investment in our infrastructure, and if you can tell me when Congress will get their act together, I'll give you a better forecast.

(laughter) That might be difficult, but thank you for the answer.

Arnie Ursaner, CJS Securities.

Quick follow-up on the acquisition of Locker Group Holdings -- it seems to be a nice expansion into the previous businesses you had bought, when you bought Delta, PLC, in perforated metal and the non-res market. Mogens, you have talked about it possibly being a fourth leg at some point. Is this a pretty good indication that, in fact, you are ready to move this forward? And, at some point, when do you move it more into the US?

As we said at the time of the acquisition, there were two businesses we acquired that could be platforms for growth -- highway safety products and the access systems. And, these are two industries we continue to look closely at. And part of our acquisition pipeline, companies we have looked at or talked to but haven't come to any conclusion on yet, fit in a couple of these subgroups within the segment. Now, it so happens that the first one that actually became a viable acquisition for us was in the same geography where we started out, and that is not an indication that we want to stay in Australia and New Zealand, it just is the one that where the timing was right. So, we continue to look at those businesses in a global sense, but there's nothing right around the corner in the geography of North America.

And you wouldn't be able to organically grow it in North America, starting from scratch, there are other people that are already too established?

I would say in that these businesses, acquisition is probably the most likely way to go. It would be very difficult and, long term, very time consuming to start from scratch in these businesses.

Okay. My final question is on the small acquisition of some galvanizers in Canada. I think you mentioned you hadn't been in there before, so could you give us a sense of how acquiring -- you want to be market leaders in the markets that you go after, how does this three acquisition -- three-plant acquisition fit into the strategy of being a market leader? And, maybe discuss the Canadian market for galvanizers?

First of all, we are already in Canada in our pole businesses and in our Irrigation business, so we are not unfamiliar with the Canadian economy, which is pretty good. And, yes, we want to be leaders in our market, but what is unique about the galvanizing market is that leadership doesn't necessarily mean broad geographic coverage. You actually create more leadership by concentration than diverse geographic footprint because you can only transport products to be galvanized a relatively short distance, a few hundred miles. So, these three galvanizers are fairly concentrated in the Ontario area, so I think it's a good solid footprint to start.

Will we look at other opportunities in Canada? Surely, yes. But, the way we look at leadership in our businesses is slightly different in the Coatings business as it is in the other businesses.

Thank you very much.

At this time, there are no further questions. I will now turn it back over to the presenters for any closings remarks.

Thank you, Jody. This concludes our call, and we thank you for joining us today. This message will be available for playback on the Internet or by phone for the next week. We look forward to speaking to you again next quarter. At this time, Jody will read our forward-looking statement.

Including in this discussion are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which Valmont operates, as well as management's perceptions of historical trends, current conditions, expected future developments, and other factors believed to be appropriate under the circumstances. As you listen to and consider these comments, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainty, some of which are beyond Valmont's control and assumptions. Although management believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Valmont's actual financial results and cause them to differ materially from those anticipated in the forward-looking statements.

These factors include among other things, risk factors described from time to time in Valmont's reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, Company performance and financial results, operating efficiencies, availability and price of raw material, availability and market acceptance of new products, product pricing, domestic and international competitive environments, and actions and policy changes of domestic and foreign governments. The Company cautions that any forward-looking statement included in this discussion is made as of the date of this discussion, and the Company does not undertake to update any forward-looking statement.

That does conclude today's conference call. You may now disconnect.