Valmont Industries Inc (VMI) 2013 Q1 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 first quarter 2013 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.

Thank you, Jody. Welcome to Valmont Industries' first quarter 2013 earnings conference call. With me today are Mogens Bay, Chairman and Chief Executive Officer, Richard Heyse, Executive Vice President and Chief Financial Officer 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.

Good morning, everyone, and thank you for joining us. I trust that you have read the press release, so my commentary will focus on quarterly highlights and general trends and needs of our businesses. The main drivers for our significantly improved revenue and earnings were very strong sales growth in both the utility support structures and irrigation segments and acquisition driven sales growth. In addition to strong demand, we also saw margins in utility and irrigation improve. This improvement, combined with volume driven fixed cost levers, led to significantly increased operating margins in both businesses.

Based on our current backlog and market activity, utility sales and earnings should remain strong for the balance of the year. In addition, current levels of customer inquiries also support our positive outlook for next year and beyond. Utility orders shipped in the first quarter of 2013 were at improved pricing levels compared to the first quarter of last year. We believe the profitability of orders shipped in the first quarter is probably at the upper range of what can be expected currently. Operating margins will continue to fluctuate from quarter to quarter, depending on the projects shipped.

The international utility markets was supported by increased sales in the Asia-Pacific region and project demand. Our long-term focus in international utility markets is on increasing the acceptance of utility manifolds over traditional lattice towers. There are many places around the world where access to electricity cannot be taken for granted, so developing economies as well as developed economies will need more transmission infrastructure to support economic growth. We expect to be active participants in this very long-term opportunity.

Our utility plants operated at high production and efficiency levels during the first quarter, and we continue to leverage our global capacity. We have a substantial amount of new capacity scheduled to come online over the next year in Tulsa, Oklahoma and Columbus, Nebraska. This additional capacity will help meet customer demand, maintain our high customer service levels in a growing market and leave some reserve for unplanned demand. These investments and capacities should support further growth in Valmont's utility business in 2014 and beyond.

Turning to the irrigation segment, record backlogs at the end of last year led to the strength of first quarter sales. Supporting demand were high levels of farm income and the impact of last summer's drought in North America. We expect high levels of activity continuing through the second quarter. In the second half of the year, the size and conditions of the North American crop plant and later this spring will drive expectations for farming in the fall and determine the outlook for the next selling season, which starts in the fall.

In the engineered infrastructure product segment, European and North American lighting and traffic product markets were constrained by weak public funding for infrastructure. However, we benefited from broad product line diversification within the segment. Demand from wireless communication customers, increased intercompany sales to utility, as well as good activity levels in Webforge access systems in the Asia-Pacific system supported results. As you know, we have been addressing cost and productivity in this segment to improve margins in spite of a weak demand environment, particularly in the US and Europe. We believe these efforts will support positive comparisons as the year progresses. We will continue looking for opportunities to further strengthen this business so it is appropriately positioned for the future.

Coatings sales rose, primarily due to the impact of recent acquisitions. Demand fell in Australia in the beginning of the year, offset by increased internal demand in North America. We expect the performance of this business for the rest of the year will improve compared to the first quarter and revert to customary levels.

As we have said in the past, our intent has been to divest of our manganese businesses in South Africa acquired with the Delta Group a few years ago. During the quarter we divested our minority of interest in Manganese Metals Company, MMC. MMC was a nonconsolidated subsidiary and we realized $29 million in cash from the sale. We will continue to pursue the sale of our interest in Delta EMD.

While it was a $1.5 million reduction in earnings in nonconsolidated subsidiaries compared to last year from MMC, we realized a one time tax benefit of $3.2 million as a consequence of the sale. There was no significant gain or loss on the sale. So, the net effect of the MMC transaction for the quarter was a $0.06 earnings per share benefit. The two acquisitions, Pure Metal and Locker, added about $0.01 to the earnings per share for the quarter.

Turning to other financial measures, the tax rate for the quarter was lower, at 31%, reflecting the one time $3.2 million tax benefit related to the divestiture of the nonconsolidated subsidiary, MMC that I just talked about. Our expectation is that long-term rates will be between 33% and 34%. The impact of currency translation on operating income this quarter was minimal. Inventories increased modestly compared to last year, mostly due to acquisitions. Depreciation and amortization for the quarter was $19.2 million and capital expenditures were $20.9 million. For the year 2013, we expect depreciation and amortization of about $75 million and capital spending in excess of $100 million as we invest in capacity to support future business growth, which includes the Columbus and Tulsa utility plants.

Looking towards the remainder of 2013, we expect the continued strong performance in utility, the irrigation segment is on track to deliver a solid second quarter. Irrigation results in the second half of the year, as noted before, will be driven by summer growing conditions in the northern hemisphere, global commodity prices and the expectations of US farm income. We expect our coatings business to have improved operating margins for the balance of the year as the Australian market is picking up and the Canadian integration will be completed. In the engineered infrastructure product segment, we expect positive profitability compares and as a result of internal efforts to improve productivity as we realize additional sales.

In summary, we believe that with the strong first quarter results, the continued strength in the utility markets and the anticipated improvement in engineered infrastructure projects, it should be possible for us to exceed our February guidance, even if irrigation results in the second half were to be below the 2012 record second quarter levels. And we will now take your questions.

(Operator Instructions)

Nathan Jones, Stifel Nicolas.

Mogens, you've talked before about maintaining operating margins, and I think last quarter you did say that you thought 2013 would be higher than that. Ex- the 2009 blip, and I assume by this point you know that you're sold out for the year in terms of capacity. Based on your knowledge of the backlog and the mix of projects in it, is it possible for you to maintain the 19% margin level that you have achieved on average for the last quarter -- last two quarters? Or can you give us some guidance on where you expect margins to be for the year in that business?

Okay, as I've said before, I think margins can fluctuate from quarter to quarter depending on what kind of projects are going through and what price levels they were taken at. And as I mentioned, I do not think we should expect to be at 19% plus for the year, but previously I've said I would expect mid-teen operating income margins through the cycle. And I would say that for this year, I would expect us on average to deliver somewhere halfway between the 15% and the 20%.

Okay, and can you give me what your quarterly revenue capacity is in that business?

Well, I would say that last year I think our total sales in that business was about $873 million, and I have told you that we add about $100 million a year in capacity. So, round numbers I would say about $0.25 billion a quarter.

Julian Mitchell, Credit Suisse.

Hi, good morning, it is Charlie for Julian. Just a question, continued comments about strength in utility, just a question sequentially. Seems like you guys are operating at full capacity, pricing got better sequentially, but revenue is down a little bit, profit down a little bit. Just curious, is there anything -- kind of moving parts? I just figured with additional capacity that you should see a steady uptick in the revenues and the profit quarter to quarter.

I would say that year-over-year we will see an uptick in revenue, not necessarily every quarter. One part is just capacity, one part is how our projects release, when are they manufactured as compared to when they are delivered. So, it is not like everything that is produced in the first quarter necessarily is delivered in the first quarter. You can have overlaps from quarter to quarter. I would look at it more at an annualized basis and say that we will probably expect revenues to be up at least $100 million that we had in capacity.

Arnie Ursaner, CJS Securities.

Congratulations on a pretty good quarter. I think we are taking it for granted.

Thank you, Arnie.

I just have a clarification on paragraph 2 in your press release regarding the one time items in the quarter. You mentioned at the beginning a $0.12 earning per share benefit from the tax change, and at the end of it you had a $0.07 benefit accounting for the above items. I just want to make sure I am understanding the impact of the tax benefit and the impact of the acquisitions.

Yes, so as I said in my prepared remarks, there was a $1.5 million reduction in earnings from MMC compared to last year's first quarter. There was a $3.2 million benefit in the tax rate, which was the $0.12. The net of those two is a benefit of $0.06, and on top of that about $0.01 from the Locker and the Pure Metals galvanizing acquisition. Does that clarify it for you?

Absolutely, I did not include the $1.5 million negative impact, which -- that explains it.

Which brings up the fact that, if I look at last year's numbers, we probably had earnings of about $0.20 a share from MMC that we are not going to have this year, but our earnings guidance, both in February and what we're going to talk about today, is excluding those $0.20; in other words, overcoming that headwind.

My second short question is on the full year revenue contribution. We ought to expect -- in other words, I guess I was thinking that the acquisitions had contributed more than they did in the quarter. Just remind us of what the full year revenue expectation is and earnings impact from the acquisitions?

Well, I think we mentioned when we bought the Locker Group that is about $80 million, and it was acquired during the first quarter. And the galvanizers in Canada, three fairly small galvanizers, maybe about $30 million in total.

Okay, so even in the -- okay, that makes sense. I will try one more quick one. Margin in coating declined; is that related to pure metal, or is there some other factors causing some margin --

There are a number of factors in the first quarter. One is just integration efforts with pure metal. Two, a slow start in Australia in the coatings business this year. And we saw improvements in the month of March, so that is why we are more optimistic about profitability levels in this segment going forward. And thirdly, we had some operational issues in North America where we had a kettle failure in the last galvanizing plant that we had to work around.

What do you think your margin will be for the year?

Well, I would guess about 20%.

Brian Drab, William Blair.

Congratulations on another great quarter.

Thank you, Brian.

Arnie asked my key questions here, so I'm going to my tier two questions. But looking at the other segment down year-over-year in revenue, can you talk about some of the more significant moving parts in that segment?

We had down revenue in the Donhad subsidiary in Australia, but fairly stable earnings on down revenue, and we had a slight down in revenue in the tubing business in North America, which is, I guess, more seasonal.

Okay, so that is related -- the Donhad business obviously related to the mining market and some slowdown in that market?

It could be, but I was pleased to see that on down revenue they hang onto their profitability levels.

Okay, and then the Locker Group acquisition, is this a Company that was a partner of your Webforge business, or can you talk a little bit about the background there?

It was an independent company that operated in some of the same markets and some adjacent markets in Australia. They also have a small plant in China and a plant in India. So, we just expanded our access system footprint and product line in the Asia-Pacific region.

Okay, and then between the Locker Group and Webforge, do you have a pretty significant share of that industrial access market now in that region?

Yes.

David Rose, Wedbush Capital.

Good morning, I had a couple follow up questions. Hoping to get a little bit more granularity in the operational hiccups because everything else looks great, and it looks like it could even be better if I can understand the galvanizing plant failure and what that means on a quarterly basis, what you have to do to fix it.

And then if we can discuss the tubular constraint. As I understand it, you delivered -- you supply the irrigation market with that, so is there excess -- or additional capacity you have to add for the tubular business?

No, the tubing business, they do serve the agriculture markets, but they serve a number of industrial markets. And it just had a first quarter that was slightly below the first quarter of last year. This is not a business that grows a lot. It is a high quality of earnings business, but it is not a high growth business and from quarter to quarter, you can see revenue move around. We do not have capacity constraint in that business.

Okay, that helps. And then on the kettle failure, can you discuss where you are in terms of that being fixed and what that means going forward?

Yes, I think that the replacement kettle will be up either this month or next month, up and operating again. It was in Tulsa, Oklahoma, where we have two plants, so we were able to move capacity to some of the neighboring galvanizers we have, so we did not affect customer service levels. But a kettle failure is not an inexpensive endeavor.

So, does that imply by Q3 we should see normalized corrosion margins?

I would expect significantly improved margins already in Q2.

John Braatz, Kansas City Capital.

A couple of questions, what kind of benefit are you seeing on the raw material front? I know zinc has come down and steel doesn't seem to be going up in price. Can you talk a little bit about the raw material?

I think the raw material situation is actually quite stable. Steel costs have not moved very much, we don't expect it to move very much. And as I have always said, we do not mind steel moving one direction or another as long as they do not do it too fast. But we see a pretty stable environment right now, both in North America and around the world. Zinc has been moving of little bit; lately it's down a little bit, but it was up a few months ago. Energy prices have been moving up a little bit, which could put a little pressure on profitability in the coatings business, natural gas in particular. But all in all, we have a pretty stable environment in our input costs.

Okay, second question, in the utility business, you mentioned that you are seeing good order levels, and 2014 certainly looks to be reasonably strong. Are you -- can you see business beyond 2014 into '15 and '16? Are you seeing a quarter in activity flow for those years? And then secondly, are there any -- what can you tell us about your competitors in terms of expansion plans? Are they adding capacity too in the utility area?

Let me start with your last question. Clearly, when you have a market that is this strong, we're not the only one adding capacity. I think we were early adding capacity over the last number of years when we saw this market strengthening, so therefore we carved out a pretty significant market share and our challenge is to hang on to that. But competitors in this market will also add capacity. I heard that Thomas & Betts, which is now part of ABB, is adding some capacity, and I would be surprised if they didn't, and I would be surprised if other competitors didn't.

On your first question, looking out further, well, whereas it is the business that has the best visibility to actual backlog, we don't have backlog going into 2015, but we are aware of the projects that are on the drawing boards from the major utilities. And we see great activity levels in '14 and great activity levels on projects with what we can see so far in '15.

Shawn Williams, BB&T Capital Markets.

Congratulations on the quarter. I just want to maybe address irrigation margins here. I think we talked last quarter about 20% being the top end of your expectations for operating margins and clearly blew through that this quarter. Where should we think about either incremental margins for irrigation or just on an absolute basis, where can we go from here? Is it -- should incremental margins be accelerating from here as you leverage some of that fixed cost infrastructure?

I would say that we are probably seeing, or we are seeing profitability levels in this business that we haven't seen before right now, which is a result of very busy plants, good leverage and an okay pricing environment. I think we will see some of the same in the second quarter because we have a strong second quarter. Depending on what is going to happen in the second half, margins will reflect those activity levels.

This is a business that leveraged very well going up and it will deleverage going down because we do not add a lot of SG&A and other costs on the way up, and so there isn't that much to take out when business softens. And as I talked about our guidance for the rest of the year, we do not know what the second half of the year is going to bring us in the irrigation business. All we can do is to model, not forecast, but model a scenario of a decline in earnings in the second half of this year compared to the record level second half of last year. And we think it is prudent to model it that way because commodity prices have softened and moisture conditions are better than they were a year ago. And despite that, we are confident in the guidance we gave you in the middle of February and adding to that the out performance in the first quarter.

Okay, and then just directionally, in Q2 you talked about Q2 potentially, or almost a certainty at this point, being better than Q1 on irrigation, just in terms of volume. So, directionally, you would expect margins to improve off of that 22% that you did in Q1?

I did not say that. What I said was we're going to have a strong second quarter. And since we were having a very strong first quarter, basically operating at full capacity, I would be pleased if the second quarter looks a lot like the first quarter.

Okay, that's helpful. And then if I can sneak one more in here, the unallocated corporate expenses, $19.5 million up pretty significantly year-over-year, even though the fact last year I think you had a bit of a -- there was a stamp tax and some other one time-ish items in there. Can you talk a little bit about what is driving that number? Is it comp, is it something else?

I can, but Mark Jaksich can do a better job, so I will turn it over to him.

Good morning. A goodly share of that is incentives, and if you recall, a lot of our long-term -- our long-term incentives are driven off of share price. So, the share price was substantially higher than it was this time last year, at least through the first quarter. And so therefore, that has accounted for some larger incentive accruals, and as time goes on, we will see how that plays out. That is probably the largest piece of that.

The other piece of it is that we do have some additional overhead expenses in corporate to support the business and so forth, but I wouldn't say that that is particularly substantial in any case. But just the whole notion of making sure that we have the right resources on hand to support the business and support growth.

Brent Thielman, DA Davidson.

Nice quarter. Mogens, any comments on the international portion of your utility business, particularly what the current pipeline looks like?

Yes I can. It is a very insignificant portion of our utility business, less than 10%, I'd say closer to 5% for the year. Now, in this quarter it was a little larger than that because we had a couple of projects and we had good activity, particularly in Australia. I would say that in the long-term opportunity, and I'm talking really long-term for increasing our international utility business, is strong for all of the macro drivers that I have talked about. But short-term, this year, next year, the big engine is going to continue to be North America.

And that was the second part of my question. Can you talk a little bit more about what you might be targeting or at least thinking about in terms of your mix of capacity in North America and international over the longer term, because it does seem like it is a pretty significant opportunity to support further growth.

Well, I think we already have good capacity in place internationally. Maybe it is used currently more for high mass lighting, but we have plants that can make large poles, utility-type poles, in China, three plants, and we have the plant in India that we opened last year. We also have large pole capacity in our plant in France and up to certain extents, and our Morocco facility. I think on the international side, we are not going to be faced with capacity requirements in the short-term, and I say over the next several years. We will be able to handle that out of the current footprint.

So, it's more of just a conversion to the monopole, is that what you are thinking?

Yes.

And Mogens, my second question is, and I think I know how you're going to answer, but I will ask anyway. As you look at the multiples of your stocks trading today relative to the earnings, your guidance implies for this year and then you couple that with your general confidence in some of these longer-term themes in infrastructure and irrigation, can you update us on your current view of share repurchases as a potential avenue for capital deployment?

Well, first of all on your comments on the current share price in relationship to our earnings guidance, I was surprised to see the downdraft over the last few weeks which was probably a result to a great extent of the softening in commodity prices. And I think the message that is important to take from our business is that whereas the irrigation business is our original business, it is a very important part of our business. We love the business. It's the business that probably has the best real long-term growth opportunities of all of our businesses. It is not our only business.

We had two segments that this year probably will be about $1 billion; one is operating very well, the other is improving very well. And so I think that the fact that we can model a down comparison in the irrigation business and still show significant growth this year is a testament to the benefit of our geographic and product line diversification, and we have seen that as you go through our history. You have seen our earnings and EBIT numbers continue to grow, but when you look below them, year from year, they don't come from the same businesses. But we have just been fortunate that the mix of those businesses has allowed us to continue to do that.

Share repurchase, I would say that we haven't done share repurchase for a long time. We sit on quite a bit of cash, we have great debt capacity, we look at acquisitions. We don't have anything that is hot right now, but we have lots of opportunities we are looking at. Our preference will be to use our cash to grow organically and to acquire in companies that would be a good fit with us. If over time we cannot find good use for the capital we require, we have an obligation to give it back to the shareholders, either in form of dividend or in form of share repurchase. But it is not something that we are contemplating right now.

Wouldn't disagree with anything you said, Mogens. Best of luck.

Jodi, are there any more questions?

(Operator Instructions)

Arnie Ursaner, CJS Securities.

So Mark, a quick follow up, what is your view for corporate expense for the balance of the year, please?

Well, it depends a lot on the stock price and how that effects incentives and such. But I think historically we've told you we would be $12.5 million to $13.5 million per quarter. We're probably on the upper edge of that right now, I would say. But that is taking into account incentives and incentives of target and excluding nonrecurring type items and other things that may get offset otherwise in the financial statements like the deferred compensation plan. I would say base spending is probably at the upper edge of that, maybe a shade higher depending on what other things that we haven't -- aren't anticipated at this time.

Okay, and then on the intersegment sales, you had a pretty sizable jump. And I know in the past what you have done when you have tremendous demand in utility is move some of that into the EIP segment. Can you comment on what the -- first of all, did that, in fact, occur, and was that a key part of intersegment? What was the impact on the EIP margin, and how should we think about EIP margin for the balance of the year, or for the year?

Arnie, this is Mark again. That is true, most of that increase in the intersegment sales was additional sales that came out of EIP for the benefit of utility. It did contribute to the improvement in the EIP segment, although there was some operational improvements through the system as well that contributed to it. So, I do not think I would say that all of that improvement came out of utility, but a share of it did.

I thought you account for (multiple speakers).

It is a little hard to isolate for sure how much, but it did contribute to it.

But in the past, when you have had intersegment in that, you've accrued it at a lower margin. Am I incorrect in that assumption?

Inside the United States that is true, but when you cross borders like from China and so forth, those have to be at arms length. And so in that particular case, the margins on those are little bit higher. But in any case, it is comparable to what our folks in utility could acquire that product for themselves inside the States.

And EIP margin expectation for the year, now that we entering a seasonally positive trend with the cost reduction efforts you have made?

I would say that -- this is Mogens, I would say that -- I stated in the past that I don't think we can get to double-digit margins without more help from the marketplace, but think we can get close. And I would expect that second, third and fourth quarter would bring us much closer to that double-digit mark than we are seeing in the first quarter.

Final question for me is in China. I know you have made major investments over the years, and China Mobile announced a dramatic ramp in their 4G base station installations, China Unicom announced 1.6 billion investments for 4G network. I'm a little surprised you're not seeing a pickup in demand in China for wireless communication poles.

Well, I was just in China last week, and I would say that wireless communication, we have been the dominant player early on in the introduction of monopoles into wireless communication. We have a lot of Chinese competitors now. It is still an important part of our business in China, but the China business is a tough business. It is not a high margin business, and I would say that there are lots of local competitors that are much more price aggressive than we like to be in that business. So, we are a little selective as to the kind of businesses we take. The market is probably there, the question is, to what extent can we participate at profitability levels we would be happy with?

Okay, again, if a may throw one more out, people question on irrigation your market shares internationally, do want to speak to that, please?

I think the international markets are very fragmented. It is a big world out there. I think we're going to see lots of growth opportunities. Over the last couple of years, I think the industry has seen more growth in North America than internationally. But I would say that international, it is a lot of project business, and project businesses can throwing numbers around quarter to quarter. But bottom line, this is a business that we pioneered 60 years ago, we've been the industry leader ever since. I have no intention of not continuing in that position, so whatever it takes for us to retain that position, we will.

Nathan Jones, Stifel Nicolas.

Could you quantify the impact on coatings earnings in the quarter from the kettle failure and any integration costs around the acquisition?

Yes, but let me put it in general and say all the things that affected coatings profitability, which is Australia's slow start up, the integration in Canada and the kettle failure, probably dropped operating income margins three or four points.

On the corporate expense, do you expect that to go back to $13.5 million, roughly speaking, in the second quarter, or will there be some increased corporate in the second quarter?

This is Mark again, when we speak of those ranges of corporate spending, that is taking into account incentives of target. And so anything that is above target, including things that affect the stock prices, is going to cause an increase in the overall corporate spending. In addition to that, there are also -- if there is movements in our deferred compensation plan assets, those will be offset by liabilities, increased for the same item which also goes through corporate expense. So, when you look at those particular items, it is not the actual spending itself, it would be the base level of spending and targets and excluding items that would be considered to be more or less one-offs.

Would that mean that at the moment you guys -- you are having great quarters quarter after quarter, that you are operating above target at the moment and, therefore, we should expect to see elevated corporate expense?

Yes.

And Mogens, one last question. Your implied guidance was about 10.25, you said now you expect to be able to beat that even if irrigation is down. Are you prepared to quantify by how much you think you can beat it?

Well, irrigation is a big question mark in the second half, and so the question is how much could it be down, or could it not be down at all? But I think I mentioned earlier that our outperform in the first quarter, I would be comfortable adding to the guidance we gave you in February.

(Operator Instructions)

Shawn Williams, BB&T Capital Market.

Just a quick follow up on utility, could you just remind me, what is the exact timing of when some of the new facilities are coming online within utility? And is it possible that we may see one or two quarters where we see that operating margins in that business actually dip? That as those facilities come online, as you have large fixed costs come online with -- maybe take some time to actually ramp up the volumes in those facilities? And just wondering if we should be building in a slight dip somewhere coming down the line?

No, I don't think the start up of the facility will necessarily result in a dip that you would be able to measure in the overall scheme of a $1 billion business. I think that we're going to see a slow start up in Columbus, Nebraska, and it will only really be online by the end of the year. We may start the start up in the Tulsa, Oklahoma, plant during the third and fourth quarter, but the real impact from a capacity standpoint will be next year. So, getting back your questions on, what does that mean for margins, I don't think it will mean a lot but I would say that from quarter to quarter you're going to see the margins move around in the span probably from 15% to 19%.

At this time, I will now turn the call back over to Mr. Jeff Laudin for closing comments.

Thank you, Jody. This concludes our call, and we thank you for joining us today. The 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, uncertainties, 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 discussions is made as of the date of this discussion and the Company does not undertake to update any forward-looking statement. Thank you, that concludes today's conference, you may now disconnect.