Valmont Industries Inc (VMI) 2013 Q3 法說會逐字稿

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

Also, we ask that you please limit your questions to one question and one follow-up question. If you would like to ask additional questions, we ask that you please reenter the queue. Thank you. I would now like to turn the conference over to Mr. Jeff Laudin, Manager Investor Relations. Please go ahead.

Thank you Jodi and welcome to the Valmont Industries third quarter 2013 earnings conference call. With me today are Mogens Bay, Chairman and Chief Executive Officer, Terry McClain, Executive Vice President and Chief Financial Officer, and Mark Jaksich, Vice President and Corporate Controller. Before we begin please note this conference call is subject our disclosure on forward-looking statements which applies to today's discussion and will be read in full at the end of the call. The instructions for accessing the 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 take it that you all read the press release so my commentary will focus on quarterly highlights and general trends in each of our businesses. The increase in third-quarter sales was driven by gains in the Irrigation and Utility Support Structures segments and recent acquisitions and made in Coatings and Engineering Infrastructure Products. The combination of mix, slightly lower input costs, and an improved pricing environment in certain businesses resulted in higher gross profit margins.

The quality of earnings continued to improve. Leverage on a modest sales improvement resulted in a 22% operating income increase to 14.1% of sales. This is a testament to both the diversification and earnings power of our businesses. Earnings-per-share met our expectations, save for the one-time $8.3 million tax expense that lowered diluted earnings by $0.31 per share. A decrease in the corporate tax rate in the UK necessitated a reduction in our deferred tax assets, thus an increase in deferred tax expense. This should have a positive impact on taxes going forward.

Before I turn to the segment results, I want to make a few general comments. Valmont today is a strong Company with a great future. In the face of weak global lighting and traffic markets we have lowered our cost structure and strengthened our competitive position. Our Utility business continues to participate in the substantial buildout of this nation's electrical transmission grid. In support of the utility demand we have added physical capacity and human capability while strengthening our market-leading position. The Valmont name is recognized around the world is the premier brand and best in class dealer network in mechanized irrigation. We have been successful in building a global coatings business with consistent profitability and return characteristics. We have been guided by a focused growth strategy that has been well executed by our teams.

Our balance sheet is solid. With discipline, patience and a keen eye on return on invested capital we should have actionable deals in our acquisition pipeline to further achieve global growth. In the short-term we're still in cyclical markets with good geographic and product line diversification. In the long-term the forward movement of population growth, improved diets will require increased food production, sustainable economic growth and development requires more investment in infrastructure. It is clear to us that the world will need more of Valmont's products going forward. We are prepared for and looking forward to participating in that growth.

Let me now turn to the results by segment. In the Irrigation segment, although crop prices were lower this summer, the outlook for higher farm income resulted in substantially increased Irrigation sales, even above last year's record. Farmer sentiment remains strong as the value proposition for pivots remain compelling, even at current crop prices. Historically higher farm land value has further enhanced grower wealth, and therefore purchasing power. Last year's drought resulted in an earlier than normal harvest, expanding our fall selling season. This year's Northern Hemisphere harvest is following a more traditional pattern. As a result, the later harvest will keep farmers busy in the field. So it is unlikely we will meet last year's record fourth quarter results. Today farmer sentiment remains positive. How this and factors influencing crop production will translate into sales next year remains to be seen.

In our Utility business sales exceeded last year's record third quarter. As you know sales can be lumpy when large projects move around from one quarter to the next. As an example, this year some customers asked us to delay third-quarter shipments until the fourth quarter. Giving new capacity coming online in the fourth quarter, solid backlogs, and shipments of deferred orders from the third quarter, the fourth quarter for Utility is shaping up to be our largest ever. Our expectations are for Utility sales to grow in both 2014 and again in 2015.

Third-quarter sales growth in the Engineered Infrastructure Products segment reflects the Locker acquisition and stronger North American wireless markets. Sales in European markets were flat. In the Asia-Pacific region sales declined largely reflecting a weaker Australian currency and economy. The contribution of acquisitions, improved productivity and lower cost structures in North America and Europe led to segment operating income as a percentage of sales of 9.9%. We are pleased to see our efforts to reduce costs and improve productivity translating into better performance in light of continued market headwinds in some regions. Coatings sales increased due to the contribution from recent acquisitions and improved internal demand. This more than offset lower Asia-Pacific results. The over arching characteristics of this business are attractive and we look forward to expand our Coatings platform over time.

Turning to other financial measures, the impact of currency translation on operating income was a negative $2 million in the quarter. Third-quarter corporate expense reflects planned expenses necessary to support our expanding global footprint. Depreciation and amortization for the quarter was $19 million and capital expenditures were $21 million. For 2013 we expect depreciation and amortization of about $75 million and capital spending of approximately $100 million as we invest in capacity to support future business growth, productivity improvements and maintenance projects. We generated cash flow of around $50 million during the quarter resulting in a cash balance of $543 million.

Looking to the fourth quarter we expect record results for the quarter and year. At this time we expect diluted earnings per share of approximately $11 even after the impact of the third quarter increase to tax expense. We will now take your questions. Thank you.

(Operator Instructions)

Arnie Ursaner, CJS securities.

Hi, good morning Mogens. In looking at fourth quarter in the Utility segment, $253 million would be a record revenue but that would be flat year over year and you have added $100 million of capacity, so I know you've used the word record, but maybe you can give us a little more feel for what your revenue and earnings expectations are for Utility and how much of your 2014 order book do you believe is already filled?

We expect our fourth-quarter Utility segment to be well over the $259 million that you talked about. When it comes to going into next year we have a good backlog already in place, we have good conversations with our customers and that gives us the confidence that we will continue to see growth next year.

Any sense, I know you don't provide your backlog until February but any sense of how much of the order book is filled at this stage?

Yes.

Okay, thank you. My final question is on your balance sheet. We have obviously followed you a long time, you've previously talked about being very comfortable at a 40% net debt to capital ratio. You are nowhere near that now, you have dramatically sizable firepower to do acquisitions or share buybacks. How do you view your balance sheet as an offensive weapon at this point?

Clearly as you say, we have good cash position, we have great leverage capabilities while still staying conservative. We just keep our eye on making sure that when we do make acquisitions we really do need to see a quick route to beating our cost of capital, which we currently look at being about 8.5% after-tax. It's easy relatively to make an acquisition today and have good EPS improvement. But that is not the test that we use.

So we have a very active acquisition pipeline. But as you know, predicting when or if any particular opportunity may materialize is very difficult. We look for acquisitions that are fairly small in the Coatings business up to multi-hundred million dollar acquisitions. So at this point in time, we are happy that we have this firepower and we hope we will find a good opportunity to use some of it.

Thank you very much.

Nathan Jones, Stifel Nicholas.

Good morning Mogens, Jeff. Mogens, you said you expect 2014 utility revenue to grow over 2013. Do you expect the industry spending to grow in 2014 over 2013? Or, do you expect to compete per share in the industry to grow your revenue in 2014?

Looking at what we see now I would expect a little bit of both. Because we have had capacity constraints because we have been ramping up so fast. We have more capacity coming online here in the fourth quarter getting ready for next year. We are starting up our new facility in Tulsa. We are ramping up our facility in Columbus, Nebraska. So I think that our growth next year will be a combination of the two avenues you talked about.

Do you expect the industry -- I know the industry has pretty much been capacity constrained for the last couple of years, you've been able to fill that capacity as fast as you have been building it. Do you expect that to continue to be the case in 2014? Or do you expect more of a balance in supply and demand next year?

Well I would guess as this industry -- the industry probably can't continue to grow at the speed we have seen the last few years. So at some point of time there's going to be more balance. Does that mean that our quality of earnings will decline? I don't know, but I would say there are opportunities to take outsourced projects or products in-house and maybe we can work on profitability improvements that way. So I still expect our quality of earnings in that business going into the next year and the following year to be somewhere between 15% and 20% OP.

Okay. I guess that's what I was trying to get out was do you think you can hold margins at the level in 2014 that you are expecting to see in 2013?

Currently that's what we expect.

Okay thank you very much.

Brian Drab, William Blair.

Good morning. As you look forward to 2014 in the Utility business, I'm looking back at my notes from the last quarter's call. And you mentioned strength in Canada in 2014. You mentioned a rebound in international business in 2014. Can you give us a feeling for if you are looking at these three categories, Canada, other international, and domestic, where you expect to see kind of rank order of the growth rates that you expect to see in those regions?

Well I would still expect North America to be the main growth engine. We are getting some traction in Canada, and internationally outside Canada it is very much project oriented. So if we get projects, yes it will improve our picture and if we don't, it won't. But west of the international marketplace is difficult to predict. So the short answer to your question is we continue to expect the US to be the main growth engine.

Okay. And are there any projects in the pipeline that are of unusual size? Something that's over $100 million or over $200 million in size for 2014?

I'm sure there are projects in the pipeline that are more than $100 million. Whether they will be led as one project or in phases we don't know. But if you look at the big utilities and what they have on the drawing board, they have sizable investments planned.

All right so when you talk about the growth that you expect in 2014, it sounds like you have a high level of confidence in that growth. And I am just tying to get a, I think all the analysts are trying to reconcile your expectation with the EIA and EEI forecasts which are for substantial downturns in spending in this industry. And I understand when you do your build up to your forecast you look at the projects that you are expecting to hit and the probability that you would win those projects. I'm just trying to get a sense for how high is your level of confidence in growth and if there are any big projects that you expect or that you have placed the probability on that is 50-50? Or are there any big projects out there that if you didn't win the project, could that significantly alter your forecast either way?

That was a long question.

I know. I'm trying to give you a sense for what, I think this is the key question that all the analysts are struggling with, you have the Street forecast up 12% next year and you'd average $280 million a quarter in this business. We are trying to get a sense for where you get that level of confidence in the face of industry downturn.

Let me take a crack at it. First of all, I have told you over the last couple of years that we have added about $100 million of capacity per year, year-to-year complete comparison. We have had some opportunities this year that we couldn't take because we didn't have enough capacity at that particular time. We track lots and lots of utilities and lots of lots of projects. So is there one particular project that if we don't get it will kill next year? The answer is no. It is a very -- we get a lot of big projects but they're geographically spread out between customers and various parts of the US geography.

We have some strategic relationships with a number of utilities and so therefore we have a higher comfort level with what we will get. We understand the bid market pretty well. And we estimate what we will get on that. And when you put all of that together, our expectation for next year, and remember in the Utility business we have more visibility than any other business we are in. We see traction for another record year in the Utility business. Will the sales be up $100 million? I don't know yet. But I would estimate it will be up somewhere between $50 million and $100 million.

Okay that's very helpful. Thank you very much. Since the question was so long I will let you go.

Thank you.

Brent Thielman, DA Davidson.

Hi, good morning. Mogens, could you just highlight some of the reasons for the customer deferrals in Utility into Q4?

Some of these projects move, maybe contractors aren't ready, maybe all the permits aren't ready. Maybe the weather was bad where a particular line is going in. And we had about -- we had more than $10 million move from the third quarter to the fourth quarter that was ready to ship and will ship probably in October.

Got it. Okay, and then I guess just switching to Irrigation. Your competitor there went as far as to say they thought they would see lower US sales next year. That you haven't yet commented yet on next year. Can we take from that you think there's a still a chance the business could still potentially grow into 2014?

Everything is possible. Based on our experience, I would expect Irrigation sales next year to weaken a little bit compared to this year. But I thought the same thing last year at this time and 2013 turned out to be a record year. So one thing we have learned in that business is it's very difficult to predict. And even though commodity prices are down, net farm income is going to be very solid, yields are going to be up. So it's not just the commodity price, it's times the number of bushels that you harvest.

And investing in irrigation equipment, if you have water, whether it's new development or if you can convert from less efficient irrigation is a very good investment, also at today's commodity prices. So I don't see a scenario where suddenly the bottom is falling out of the irrigation business. But cyclicality has not gone out of agriculture. And if I had to put my money on it right now, I would say could be a small softening next year but I don't think it's going to be something very significant.

That's great, thank you.

Ryan Connors, Janney Montgomery Scott.

Thank you. A couple of questions. First expanding here on Irrigation a little bit. I think the conventional wisdom is that the international irrigation market will buck the down trend next year that potentially could come in North America, whatever the magnitude of that. I wondered if you could give us your take on that conventional wisdom and whether there might be a scenario where the opposite happens and we actually find out that international is also susceptible to a down trend in commodity prices and may grow faster over the long-term, but actually suffers as much or more in the short term as well? What is your take on where international could go?

I can paint all kinds of scenarios, but over the last few years, North America grew faster than international. International had a good growth year this year. And it is much more of course geographically diversified. And based on what we see today, I would expect our international business to grow next year. And we already talked about the North American side, so you can international make up for any slowdown in North America? That all depends. International is not the same size as North America. So that question I cannot answer but I can tell you that currently we expect that the international markets next year in total will grow.

Okay, that's very helpful.

You also asked if international could decline, that's always possible. If something happened politically or if the general economy worldwide makes people nervous like we saw a few years ago, that can happen. But the way we look at it today, and as we look at our slat plan and our annual operating plan for next year, we expect the international business to improve over this year.

Okay. And them I wondered if you could expand a little bit on the Coatings outlook and to what extent you think that that's correlated with your other businesses. And in particular as the USS new capacity comes online, will that increase your utilization and drive positive operating leverage in the Coatings side as well?

The answer is it will increase our [comments] coming from internal customers but it won't really, in the overall scheme of our global Coatings business, that won't really move the needle. I think our Coatings businesses, looking at it in today's environment, will have another year similar to this year. If we find acquisitions to improve on that number like we did this year, that would be great. But I don't think we should plan on suddenly a further improvement in operating income percentages unless something happens in the marketplace that would give us that impression. And that is not the case today.

Great that's helpful. Thanks for your time.

Thank you.

Shawn Williams, BB&T Capital Markets.

Good morning and congratulations on the quarter.

Thank you, Shawn.

I wanted to talk a little bit about EIP here. Very good margins and I want to say maybe record quarterly margins this cycle. Can you just talk about maybe where you see some of the internal initiatives driving that margin expansion, what type of level we could expect going forward? Is this a business that can be a low teens margin business? Help me frame the opportunity there.

Let me start with the last part of your question, can this be a low teen business, absolutely. I have said for the last several years as the world has seen a pullback in public spending for various reasons that this business probably couldn't get to 10% operating margins without some good help from the marketplace. I think they have achieved that without a lot of help from the marketplace. Yes there have been pockets of improvements in Asia, in the wireless communications business in North America.

But most of the improvement has really come from better productivity, taking out costs, downsizing our European footprint, and kind of just saying it could be tough for a while so let's be careful. So when we get more tailwinds in that market, I see that these businesses should be low to mid teens operating income. And short-term, this is a seasonal business so first quarter is usually under more pressure. But otherwise I would expect that business to continue to operate at about the level we have gone gotten it to now.

Okay. Thank you. And then I wonder if you could just talk about overall costs for the business and for the Company. SG&A as a percentage of sales continues to run above last year's levels and I know you have been investing in overseas expansion. But can you just talk about at what point do we see, is there a period as we move into 2014 or beyond where we should start to see more leveraging of the SG&A costs? Maybe just your thoughts there.

Well in some of the business units you have seen great levels of SG&A. On the corporate side we have been investing in more IT and other areas as we continue to expand our global footprint. But it would be my hope that over time we ought to be able to wring off some SG&A leverage also at the corporate level. Costs in general, we have, steel has been kind of a friendly commodity this year. We have not seen much movement. I think we have benefited slightly from that. Over time the steel industry may take capacity out to firm up pricing. And I have always said that it is not so important to us what steel pricing is, it's important that it doesn't get to where it's going very fast so we have an opportunity to pass on and adjust our pricing. But currently we don't see a lot of movement in commodities, whether it's steel or natural gas or zinc, it's been pretty stable.

I will maybe try and sneak in one more housekeeping question. You mentioned that the tax rate may be a bit lower. Any guidance there on what that rate may be going forward?

This is Mark Jaksich. Going forward, the effect of that UK tax rate reduction, at where we are today, maybe a couple of tenths on the overall rate? It still should pretty much be in the range of where we give our prior guidance, 33% to 34% on a global basis.

All right. That's helpful guys, thanks a lot.

Julian Mitchell from Credit Suisse.

Hi Mogens, it's Charlie for Julian. How are you guys. Just had a question with Utility. Again just the capacity issues. I know last quarter in terms of volumes it was pretty flat but got a nice tailwind from pricing and mix. We also saw a nice tailwind from pricing mix in the first quarter. And I assume you saw some of that into the third quarter. When you're talking capacity obviously we started to get the volume numbers versus the pricing mix numbers. Are you assuming a flat pricing mix environment into next year for $100 million? Or is it, if pricing mix continues to have the kind of momentum, could it be a lot higher?

I think we're going to assume what we have seen know about that mix. I think some of the downward pressure maybe of revenue has a little bit to do with steel prices. Steel prices this year are slightly lower than they were last year and I cannot give you the exact effect of it. But we have benefited from good mix and generally favorable pricing. And I would not say that when you look at next year certainly we should change our forecast of the Utility business delivering somewhere between 15% and 20% depending on the quarter and what projects go through.

And then for next year, obviously we have seen lumpiness obviously. Part of that is capacity related. Should it be more balanced do you think, more balanced to less seasonality next year just kind of in the Utility business?

I wouldn't count on that. Projects can move from quarter to quarter. Weather can play an impact. These are installations that if we have a couple of snowstorms it can change when construction crews are ready for installation. So in that case, I would look more at it on a yearly basis.

And then lastly, I was wondering if, are there any segments -- clearly in Irrigation it seems like a fairly consolidated market, are there segments that you would rule out M&A?

No, of our segments, no. All our segments are good cash generators. They all have access to capital for acquisitions and the target is, or the test is they have to show that they can beat our cost of capital. And we don't favor one segment over the other.

So you wouldn't say that the opportunities -- I was just kind of thinking that in some of these businesses it seems like your market share is fairly high. And possibly, obviously you guys have a lot of cash to use, and just was curious if you would ever add another leg to the Company or if you think you are kind of too spread out at this point?

No I don't think we are too spread out. And you know our philosophy is that we would only acquire into adjacent spaces if we are comfortable knowing enough about either the market or the product line or the technology to be comfortable that we know what we're doing when we move in there. Could eventually down the road one of those adjacencies turn into another segment? Yes, that could happen. But in general on acquisitions, we don't favor one segment over the other. The segment with the most diverse product lines is EIP. So there maybe more opportunities in those product lines and adjacencies to them that there for instance would be in Utility North America. But then there could be opportunities in Utility internationally.

Okay great thanks.

(Operator Instructions)

Jon Braatz, Kansas City Capital.

Good morning, Mogens. Most of my questions have been answered. But two little questions. What kind of level of CapEx spending are you anticipating for next year? And then secondly, in the Irrigation segment, assuming business is down a little bit or maybe even more than a little bit, what kind of ability do you have to reduce your cost structure in the Irrigation business?

To your first question, I think of capital expenditures next year, current outlook would be at about the same level as we have seen this year. When it comes to Irrigation, Irrigation got great leverage on the way up. And they will get deleveraged on the way down. We added some SG&A in Irrigation but really not a lot. And we have added SG&A in connection with new initiatives, whether it gets to a product development or market development. And I don't think if Irrigation has a softening that we are going to discontinue those initiatives. So I would not expect us to take a lot of costs out of the Irrigation business if it softens a little bit.

Okay, thank you very much.

Brent Thielman, DA Davidson.

Hi Mogens, just a follow up. Your comments on improvement in Engineered Infrastructure Products for next year. I'm assuming you're building in some expectations for market growth and was just kind of wondering where you see that potentially coming from?

We are actually not building in a lot of expectations for market growth in the two big areas like North America and in Europe. We have seen some better traction in wireless communication this year and we're hoping that that will continue into next year. But until we get more visibility in the form of for instance a highway build in North America that lasts more than a few months or couple of years, I think that our focus is more going to be regional and figuring out what customers can we serve better and more profitably than maybe others.

Asia-Pacific I think we are going to continue to see good strength. I think I saw this morning where the Chinese economy grew 7.8% last quarter which was a positive surprise, and usually some of that spills over into the rest of Southeast Asia. Australia is a big market for us. And in Australia, short-term there has been some softening as a result of the slowdown mining industry, that has translated into lower currency. And short-term of course that would translate into lower earnings and revenue coming back to US dollars. But long-term that is a plus for us because it makes Australian base manufacturing more competitive compared to imports. So things move around geography by geography, year in and year out, but that is kind of a summary of how we look at it.

Okay, thank you.

Nathan Jones, Stifel Nicholas.

Hi again, Mogens. I just wanted to follow-up on your outlook for CapEx next year. Are you intending to continue to add capacity in the Utility business in 2014?

No.

Can you then kind of color in for us a little bit what the uses of that CapEx are going into?

I will give you one example, this week we broke ground on a new manufacturing facility in Argentina for irrigation, that will take some capital. And then there is a lot of productivity improvement, capital and it is not one big projects. It will be a great number of smaller projects around the world.

What do you considered to be your maintenance level of CapEx?

About $50 million.

All right, thank you very much.

(Operator Instructions)

Arnie Ursaner, CJS securities.

Hello. Mogens, on some international things, could you comment on the status of India? And the 4G buildup, 4G network build up in China and how those are impacting your results?

Starting with India. We started off last year. We have a good-sized pole plant in Pune and we have the largest galvanizing bath in India also in Pune. Both facilities have started up well. I think we this year will be close to breakeven in India in the first full year of operations and we are pleased with that. So we continue to see good traction in India, good volume. It's a small start up so moving the needle for Valmont will be a long time. But I'm glad that we got a foothold in India and I think over time it is going to be a good opportunity.

Continuous wireless buildout in China, yes it is happening. China is very competitive but we have a very good market share in wireless communication poles. Our China business this year operated at better profitability than last year. Some of that is as a result of using couple of the China plants for export, both back to the US but also into other international markets.

Okay. My final question relates again to your balance sheet as an offensive weapon. Can you give us a sense of the total pipeline of acquisition opportunities you are looking at? Is it in the hundreds of millions or $1 billion? What is the total? And again, remind us of how much flexibility you have to pursue these?

Well in the pipeline today, and you know that some of those are further down the pipe than others. But we keep constantly an eye on companies that total up to being in the billions, not the hundreds of millions.

Okay, thank you.

David Rose, Wedbush securities.

Hi, good morning. Two quick ones. On the international pole side, it is relatively small but I think in the second quarter conference call you had noted that some projects were pushed out and so I was assuming that they would be pushed out to the third quarter. Were they eliminated? Are they pushed out to the fourth quarter? I know it is a lumpy business, but was there some of that impact that we saw push out? I think you mentioned the domestic side.

I really don't recall a conversation about a push out. We had one project I recall in North Africa that was pushed out because of political unrest. But in general it is not something that would move the needle. I would say that there was some nervousness over the last few years about what was going to happen in Europe. The European economy has gone through tough times. But our European pole businesses are actually having a very satisfactory year.

Okay great. And then on the international front. You mentioned the facility expansion in Argentina. I was wondering what your expectations were in terms of growth in Brazil and Argentina for next year and 2015 on the Irrigation side. Maybe you can paint just a little bit of a picture of what you are seeing in those markets.

Brazil is a very strong market for us and it, Brazil is going to have a record year this year. The environment in Brazil currently is good. And when we look into next year, people are optimistic. I am heading to Brazil next week so in February I can tell you more about it, but Brazil is a great market for us. Argentina has always been a good market for us with very high market share. There have been severe restrictions on imports, last year and this year that has actually dropped the market size in Argentina and there's a push for more local manufacturing. And we're reacting to that because we feel that Argentina -- agriculture in Argentina provides a substantial opportunity for us going forward and that's why we're making the investment.

And the plant would be operational to serve that market by when?

If I answered specifically I will tell you more than I know. But I would guess by the second half of next year.

Okay perfect. Thank you very much.

Are there any more questions?

No sir, there are no further questions. I will turn the call back over to you.

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. And at this time Jodi will read our forward-looking disclosure.

Included 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 materials, availability and market changes of domestic and foreign governments.

The Company cautions that any forward-looking statement, including in this discussion, 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.