Valmont Industries Inc (VMI) 2013 Q4 法說會逐字稿

Good morning, my name is Jodi and I'll 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 been placed on mute to prevent any background noise. After the speakers remarks there will be a question-and-answer session.

(Operator Instructions)

Thank you. I would now like to turn today's conference over to Mr. Jeff Laudin, Manager Investor Relations. Please go ahead.

Thank you Jodi. Welcome to Valmont Industries fourth 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 to 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 a replay of this call can be found in our press release. I'd now like to turn the floor over to our Chairman and Chief Executive Officer, Mogens Bay.

Thank you Jeff, good morning everyone and thank you for joining us. I trust you have all read the press release.

The main drivers of increased sales in the fourth quarter were the positive impact of acquisitions in the engineered infrastructure product encoding segments combined with organic growth in the engineered infrastructure product and utility segment. These more than offset the anticipated decline in the irrigation segment.

Fourth quarter operating income was slightly higher before the impact of a de-consolidation and an asset impairment at Delta EMD in South Africa. In the irrigation segment despite the volume deleverage and increased SG&A spending on growth initiatives operating income was 16.5% of sales.

In the utilities support structure segment weaker results in international markets and an inventory write-down more than offset a substantial increase in North American operating income. However, segment profitability was still a strong 17% of sales. Operating income increased in the coatings segment from 20.5% to 21.2% of sales and engineered infrastructure product operating income improved substantially to 10%.

I will now turn to the segment results for the quarter. In the irrigation segment sales were down 6% from the same quarter in 2002. The decline was all in our North American markets where lower commodity prices led to lower activity levels.

This fall we experienced a more normal selling season with harvest taking place later than the year before and we also did not repeat the drop mentality as an additional driver of sales.

Operating income as a percentage of sales was a healthy 16.5% compared to 19.9% the previous year. Lower activity levels also means our customers could postpone placing orders without a concern regarding delivery before the spring planting season.

As a result the year-end backlog was less than half of the previous year's level. This does not indicate that we expect to reduce sales level to that extent during the beginning of this year, it merely confirms a more normal selling season.

In the utilities support structure segment revenue reached another record as a result of strong activity levels in North America. Our home market also delivered a substantial improvement in profitability. More than offsetting this were very weak results in our international markets.

Revenues decreased substantially and the international businesses swung to a loss for the quarter from strong profits the year before. This included in inventory write-down related to a project in North Africa.

This industry has had a substantial capacity in the US over the last few years and today we are probably seeing a better balance between capacity and demand then has been the case to past few years. As a result, lead plans have been reduced substantially and utility customers do not have to place orders as early as was the case when capacity was tighter.

This is likely the reason for our backlog being down approximately $100 million from the year end of 2002. Not we believe an indication of the weakening market. Operating income for the segment declined 5% at 17% of sales.

In the engineered infrastructure products segment the contribution of the Locker acquisition in Australia and improvement in North American markets led to higher sales. Operating income as a percentage of sales was 10%. Cost management and productivity measures implemented in recent years led to a better performance despite continued weakness in many of our markets. The improved results are a testament to the efforts of our team.

Coatings sales increased mainly due to the contribution of a Canadian acquisition in the fourth quarter of the previous year and operating income as a percentage of sales in this segment increased to 21.2%.

When recapping our full year results, two observations stand out. First, the utilities structures industry was capacity constrained when supplying large transmission structures. Our network of plants and a favorable pricing environment enabled us to achieve a high operating income of 18.2% on record sales.

Second in our irrigation business the drought in 2012 in North America drove commodity prices and farm incomes to very high levels and helped us deliver a 17.5% top line growth and operating income as a percentage of sales of 19.4%. These are exceptional results.

In our other businesses acquisitions and organic growth helped engineer infrastructure product sales to exceed $1 billion in revenue. Operating improvements led to an increase in operating income as a percentage of sales from 5.8% to 8.7% in 2013.

Coatings had modest revenue growth and their operating income as a percentage of sales reached 20.9% for the year. Operating income as a percentage of sales for the company grew from 12.6% to 14.3% and adjusted earnings per share were $10.97 before the impact of the Delta EMD events previously disclosed, a record for the Company by a significant margin.

Turning to other financial measures; depreciation and amortization for the year was $77 million; capital expenditures were $107 million. For 2014 we expect depreciation and amortization of about $75 million and capital spending of approximately $100 million.

We generated cash flow of around $226 million during the year net of capital spending in acquisition. Our ending cash balance was $614 million. Now that Delta EMD is recorded as an investment on our balance sheet, we will mark its value to market at each quarters end based upon the value of the stock and the Poppit market in South Africa.

Looking towards 2014, we expect a significant unfavorable comparison for the first quarter. We expect a meaningful decline in the North American irrigation business as a result of lower commodity prices and resulting impact on farm income. Partly offsetting this decline we anticipate further growth in international irrigation markets.

In the utilities support structure segment we are planning for increased sales in North America for the quarter being offset by substantially lower sales in international markets. The severe weather in this country in the first quarter has resulted in numerous plant closings, productivity challenges and transport difficulties. This combined with some pricing pressure will lead to lower profitability in this segment despite good volume.

For the full year our current outlook for the Company is for a slight decline from the $10.97 adjusted earnings per share of 2013. We will now take your questions. Thank you.

(Operator Instructions)

Nathan Jones, Stifel.

Mogens I guess I'll start with the obvious question in irrigation now that we are most of the way through the first quarter. Can you give us some more color on what your expectations are for the decline both in the quarter and in the full year?

Well first of all, the full year I cannot give you much flavor on because as you know, the summer growing season and ensuing commodity prices and growing conditions will dictate how the fall season will turn out and it is too early to talk about that. For the first half of the year, we expect a substantial softening compared to record levels in the first two quarters of last year.

We are only is in the middle of February and I'm not prepared to give you any percentages, but it is a meaningful decline we expect both in the first and the second quarter in North America. On the other hand, we expect our international businesses to continue to grow. They are not big enough to offset the decline in North America.

Could you talk a little bit about what kind of deleverage you are looking at, at least in the first half in the irrigation business in terms of what your expected margin maybe for the first half is?

Well I will give you a general response in the sense that as I have said numerous times when the market strengthened we get the great leverage on the way up and we get the same deleverage on the way down. To a great extent our SG&A expenses are pretty much fixed, that does not mean we are going to take a look at it and see what we can do to lower our cost structure. But in general, we will see deleverage more in the range of the gross profit margin.

Okay, that's helpful. Thanks very much.

Arnie Ursaner, CJS Securities.

Maybe Terry can give us a lot more specific numbers on the utility piece and what happened in international. You mentioned in your prepared remarks Mogens you went from a significant profit to a loss. Maybe we can get the quantification of that, a quantification of/or magnitude of the inventory write-down with the goal being a better sense of an adjusted margin in utility in Q4.

Arnie I know that Terry has that information but I am going to answer your question. First of all, the swing in international profits was multi-million dollars.

We had a very strong quarter the year before and we as I said we swung to a loss in 2013. The inventory write off for the North American, or North African project I would say was around $2 million maybe a little bit higher than $2 million.

How should we think about the adjusted margin in the utility segment in Q4 when you build all that in?

Well if you look for North America, the margins in the North American business were still in the high end of the band I have constantly given you between 15% and 20% OP.

Okay and then my other question relates to your Q1 outlook. Obviously there are many moving parts, everyone seems to be focused on irrigation. But perhaps you could comment more on the impact of the weather, the way you see impacting Q1. How much of the shortfall in Q1 might be more broadly impacted by weather? Also the pricing issue in utility how that might impact the North America market in utility.

In North America, we expect in the first quarter to have increased revenue and lower profitability. Half of it is some pricing pressure which I can't, won't quantify exactly but a good portion also is the weather related challenges we have had. It is very difficult to get your arms around exactly how much does it cost you when you have plants closed for a day or two when you can't get trucks in, or you can't get trucks out, or utility customers are not ready to take it because of ice storms or whatever else may happen.

It is probably going to be a little messy in the first quarter quantifying exactly what comes from what. But in general, I will take this opportunity to talk a little bit about how I look at the utility market. I think the utility market, and our utility team think the utility market will continue to be strong this year also compared to 2013. The volume is going to be there.

What has happened is that we have seen capacity now probably catch up with demand in this business. The big question is, pricing discipline. What is going to happen in the marketplace?

You remember in 2010 when the market weakened we saw a lot of pressure on pricing. This time around it is a different challenge, but I think it is going to be the same issue. Now we have capacity probably meeting market demand and the question is, how disciplined is the industry going to remain on pricing?

Brent Thielman, DA Davidson.

Mogens, is the confidence and improve results after Q1 to kind of get you back to that or near that $11 EPS level. Is it more on the utility side or is there some expectation that you see some stabilization on the irrigation side as well?

I think it is a little bit of both. I think utility will have a difficult first quarter and also internationally. Internationally it doesn't happen very often. We kind of had two quarters back-to-back, with very difficult results.

Even though the international business as an overall percentage is not that big, when it doesn't get business it de-leverages very badly and that is what we have seen in the fourth quarter and we will see in the first quarter. I do think that you go into the second quarter you are going to see an improvement in the general utility business.

On the irrigation side, I think it is mostly the very difficult comparisons compared to the first half of last year. So therefore we think again subject to what happens during the summer season that the comparisons in the second half of the year is going to be much easier than in the first half. That is why we say that we will probably see, as we have predicted, a very unfavorable comparison in the first quarter and as the year goes on that picture will improve.

Sure and then can you give us a sense of the business development costs in irrigation, what degree that was a drag in the quarter. Do those continue here in the first half?

In the overall scheme of things, it didn't move the needle a lot, but as I said before, as we get into a situation now where we see a softening in the business, we will look at every aspect of our cost structure to see what we can lower. We didn't add a lot of SG&A going up in the irrigation business so there is not a lot to take out, but there is always something.

Brian Drab, William Blair.

In the utility market could you give us a better sense for roughly what percent of revenue is coming from outside North America recently? Then also related questions, were the challenges that you saw in international markets, I guess outside of the North African project, a bit of a surprise in fourth quarter? Then also what kind of project activity are you seeing in Canada?

Three questions.

Yes three questions.

Number one, in the international utility compared to the North American utility, it is still in the 5% to 7% range of total revenue in utility. I wouldn't say that fourth and first quarter necessarily is a surprise to us when I talked about international utility I have always said that is very project oriented.

They come in bigger lumps and you do not know exactly when they come. I wouldn't say we are surprised, we're not happy with the fact that there were very few projects in the fourth and first quarter but in total, it is about the 5% to 7% range of overall revenue.

The last half of your question was Canada. There is quite a lot of opportunities in Canada and we have started to get better traction in the Canadian market. So we expect the Canadian business to grow this year compared to last year.

The 5% to 7% international doesn't include Canada just to be clear, is that right? The international defined as outside of North America or outside of the US?

It is outside North America.

I don't know if you can put a finer point on this, but given the rebalancing of capacity with demand in utility, can you make any comment as to whether utility margins might be higher or lower in 2014 compared to 2013?

I wish I could. Right now it is a moving target, but my feeling is that margins are going to be lower in 2014 compared to 2013 as a result of more capacity in place to the extent it depends on the pricing discipline in this market. As we go through the year we will get a better feel for that so two months from now when we talk to you at first quarter announcement we will have a better feel than we have today.

David Rose, Wedbush Industries.

I was wondering if you could follow up on a couple questions on the utility side. If you could, help me reconcile the backlog decline with your expectations that you had and I'm assuming there the same in Q4 that, that business will be up in 2014 and 2015. I understand that there are shorter lead times, but how do you get comfort and how do we get comfort that, that business will be up versus the 23% year-over-year decline?

We -- the way we look at the utility market is our utility team, they track the projects that are taking place across the country as they dialogue with utilities. The activity level for last projects is at worst flat for 2014 compared to 2013 and the activity levels for 2015 looks like up from the current levels.

Does that mean that utilities have locked that in? No. That is there planning. If something happens in the general economy or interest rate spike or something like that, that can change the environment, but over the last number of years that is how we have tracked how this business has grown and it has worked year after year. Therefore we have no reason to expect that it wouldn't be a good way to look at the business also now.

I am actually not so concerned about the market size. In other words I think volume is going to be there, pricing will dictate how attractive that business is going to be.

When we think about the expansion that you have made in the utilities support structures side in large part to be more competitive and closer to where you see your customers, has that competitive landscape improved given the expansion that your competitors have had or would you say it is about even or worse?

And then on a follow up is does that improve your on-time delivery or expectations for delivery times?

Clearly, having more capacity and having a broader geographic footprint helps us to respond faster to customer demand. If customers demand delivery faster than they did when capacity was an issue, it is going to help or at least retain our competitive position.

So really there's no sense if they have gotten more competitive or that's changed at all?

No I don't think so. I think the balance in capacity, I would say that between our capacity addition and the rest of the industry capacity addition, the balance between the two probably haven't changed much.

Lastly if I may, in terms of the guidance, what really affects or at least in your view, what can you see affecting the top or bottom end of your expectations? What would drive your numbers below the $10.97 number and what would drive it above and how realistic could those be?

I haven't talked about currently driving it above, but I think the big question mark is the pricing discipline in utility. Irrigation you can kind of put aside because that is an unknown as to market demand, but in the utility business it is pricing discipline because if you think about it, if it is about $1 billion business for us 1% of price softening is $10 million in operating income. Having said that, the last few years our focus in that industry has been to add capacity, make sure we could grow our business as fast as we have grown it over the last actually 10 years.

We will now have enough capacity in place to take us through this year and certainly also 2015. Our focus now have to switch over to how do we make that capacity more productive, how do we address our cost structure in the utility business.

When you grow as fast as we have grown, I am sure there are ways, things that we have done that is not as efficiently as they could be. So I will make the parallel to our engineered infrastructure businesses, when they went into a tough market situation several years ago, they switched a lot of their focus to what they can control internally.

Some of that is going to happen in the utility business to. We will, if you will switch our focus to be a more efficient in what we do, more cost effective in what we do if we have to do with more difficult pricing environment.

Have you identified specific initiatives?

We're in the process of it. So it's yes and we're in the process of it.

Julian Mitchell, Credit Suisse.

It is Charlie for Julian. Mogens, the cash balance is pretty big now. Just was wondering if you could give us an update on capital allocation?

Yes, the cash balance is pretty good, most of it I will remind you is offshore. As I have always said about cash allocation, our priorities have not changed. We know that if we cannot find good opportunities either in acquisitions or growing our business to use our cash or to efficiently use our balance sheet than it is our obligation to return it to shareholders, either in the form of stock buy-back or in the form of increased dividend.

Our Board deals with capital allocation nearly at every board meeting and we will again talk about it next week. They will evaluate the acquisition pipeline and they will evaluate the alternatives.

We as managers are completely lined up in driving efficient use of capital because our long term bonus programs are tied to return on invested capital including the cash we have on our balance sheet. So we are in the same boat as our shareholders.

We also need to make sure that we stay disciplined on acquisitions. There's a lot of money out there today, there's a lot of private equity activity but we still have to stay disciplined that when we buy a company, we better beat our cost of capital within a pretty short period of time. So we are not looking at acquisitions to see if they can be EPS accretive because of low borrowing cost.

We are looking at, will it really beat our cost of capital. We stay disciplined and we know we have to look at the alternatives also.

Just a follow up, with earnings down 25% or so in the first quarter, you realize maybe a tough comp from last year. What gives you some confidence that, that will rebound to, for earnings for the year to just be down slightly? Is weather helping out or if you could just maybe highlight a couple of big points?

To start with the last part of your question I sure hope weather will help out. I can't imagine another three months of the disastrous weather we have seen throughout North America for the first couple of months of this year. Really, part of it is, it's the comparisons to the previous year. I'll start with the irrigation business.

Irrigation business had very, very strong first half of 2013 and that is not going to repeat itself. The second half of the year we may settle into a more normal irrigation season and therefore the comparisons will be better.

We continue to expect improvement in our engineered infrastructure product segment. I have said repeatedly that I do not think they can get to 10% operating margins for a year without a new highway build, long-term highway build in North America and all the help from the marketplace, I may be proven wrong.

I think we are going to see further improvement in EIP. I think our coatings business will continue to have strong quality of earnings and to the extent that we can find acquisition in that business like we did in Canada at the end of last year with pure metal which has been integrated very efficiently into our coatings business. To the extent that we find these opportunities that will help and other opportunities on the acquisition side may also help. I think that the toughest comparisons we are going to have is going to be in the first quarter for a whole bunch of reasons.

Kevin Bennett, Sterne Agee.

One question Mogens on the infrastructure business. Can you talk about how you see the year playing out? Obviously first quarter will be weaker just due to seasonality, but what about the rest of the year? Do think we can hit that 10% margin goal in 2014?

As I just said I may be proven wrong, think we will get close, I think the first quarter in EIP is always a very difficult quarter, more difficult because of weather in North America. I think we are going to see positive comparisons in the EIP segment both from an operating income dollar standpoint and the quality of earnings standpoint every quarter through the year. With the exception of the fourth quarter where we had a very strong.

Yes, what do you see driving that? Is the highway business in the US is that the international business is it the communication or all of the above?

I don't think it is necessarily highway business in North America but our communications business in North America was substantially stronger in 2013 compared to 2012. I think it is kind of brought effects worldwide. In Asia Pacific our biggest market is in Australia and not only do we have to improve the size and quality of our business there in local currency, we will also have to overcome a weakening Australian currency and that is the wild card, if the Australian dollar continues to weaken then we will focus on how does the local management team manage in their local currency as opposed to our translated into US dollars.

Schon Williams, BB&T Capital Markets.

I wonder if we could just address your thoughts on Delta here. I understand it is a small piece of the overall company and you have de-consolidated here, but I'm just wondering, it looks like they lost a significant North American customer here recently. Is this a business that, I don't know, as we look out into 2014 we should assume that it will continue to be unprofitable. I am just wondering I don't know, is there a worst-case scenario here where this is actually a going concern problem? If you could just kind of give us some sense of where this business goes over the next 12 to 18 months.

Let me take you back to when we made the Delta acquisition. Let's start with that. We had a couple of businesses in South Africa, MMC and Delta EMD. Delta EMD we consolidated, MMC we had a minority interest.

At the time we said we didn't put a value on those businesses as it relates to the total acquisition price for Delta, but of course we had to put the balance sheet so put a value on our balance sheet. Since then we have received substantial cash out of those businesses, in dividends or asset sales and early last year we sold our minority position in MMC. Delta EMD is a public company, it is now de-consolidated.

On our balance sheet will be the value in the South African market of the shares we own in that company. To the extent the company will perform worse than it has and the share price will decline, we will take that either plus or minus at the end of every quarter on our balance sheet and it will go through the P&L. It is a non-cash issue.

We are not in the situation where there may be a capital call from us into that business. This is a public company and we are merely an investor in it. To the extent we will get the value out of this ownership we have today, time will show, but we never expected to get any value out of it.

I guess maybe to ask this a different way, Mogens; you have reduced your ownership in the business. Is it your goal to over the next 12 to 18 months, you would like to reduce that to zero essentially? That is what I am --

That is correct -- We try to reduce our ownership there to zero.

Okay, now that is helpful. Separately, I wanted to challenge your ideas around the irrigation business and just the international side of the business. One of your competitors has noted that even though I guess international markets have held up better than North American, the thought is that inevitably in international will turn down if North American turns down.

I just wanted to get your thoughts on, can the penetration of the technology and just increased mechanization, can that, do you feel confident that, that can fully offset the macro environment and the lower farm income that international customers face? Again I just want to kind of get a sense of why you feel that, that international market can hold up in the face of a declining North American market.

And we are talking about 2014?

No we are talking about 2014, yes.

The answer is yes. I think the international markets will improve over the last year's international result in 2014. I think the markets internationally are so geographically diverse, there so many different drivers in those markets that despite commodity price softening on a global basis I think our international business this year will be bigger and more profitable than it was in 2013. Now, I also want to make sure that everybody understands, it is not of a size where would offset the softening in the North American market but your question was specific on the international market.

That is very helpful, and maybe one more if I can squeeze it in here. Just on coatings business or the organic coatings business maybe just focusing on the US, we've certainly seen some leading indicators improve across industrial production starting to accelerate a bit here. When, is there a bit of a delay effect to when that would start to, you would start to see that improvement hit the coatings business? I'm kind to get your thoughts on when should we expect the organic piece of coatings start to pick up? Is it late Q1, more of a second half recovery? Just your thoughts on when organic can start to pick up there.

I would say in general the coatings businesses are tied to the general economy. So, if the general economy accelerates we will probably see an acceleration in the coatings business.

If a project is approved -- is being implemented in infrastructure, one of the last things you do before you put it together is galvanize the steel structures that go into that project. In that sense we will be late in the cycle. But I don't think that organic growth in the coatings segment is going to be very significant.

I think our long term opportunities in the coatings segment is continue to operate them very efficiently, continue to share best practices to improve the quality of earnings, and to have great field start ups and acquisitions in that business as we have seen in the past. That is where the growth in coatings is going to come from, less from organic growth.

Jon Braatz, Kansas City Capital.

Going back to the utility sector, you mentioned that you expect the second half of the year and the international area to improve. Are you seeing projects out there now that you are working on that gives you that confidence that the second half will be better?

We're working on a number of international projects and the activity internationally is stronger going further into the year. Where we will be successful in securing those projects, that is too early to say.

Is that the primarily China?

No.

Secondly, we are hearing I guess hearing and reading about a build out in Canada, improvement in their grid. Do you have as much market share presence in Canada as you do here, or a little bit less? How are you working on to strengthen your position in Canada?

Now on the specific questions on market share in Canada I may tell you more than I know. But my feeling is that our market share in Canada is substantially less than what our market share is in the US.

We have stepped up our activity level in Canada from a sales and marketing standpoint and we are fully utilizing both our North American plants and our China plants to penetrate the Canadian market. I agree with you, what we hear from our utility people is that activity levels in Canada are stepping up.

Are you, you have a lower presence or lower market share to Canadian companies or other US companies?

I would probably guess Canadian companies and maybe to other materials, Canada there's been a lot of utility lines over the years going in wood structures as opposed to steel. So part of it is trying to promote these chains from wood to steel.

(Operator Instructions)

Arnie Ursaner, CJS securities.

Mogens if I add back the $5 million you were talking about in internationally, your operating margin in utility support would have been 19% just in case you want the math.

I have the math.

What caused the write down of the North African project?

It's not being delivered. I mean we have had that on our books for a number of quarters and I won't give you the specific country, but it is a country that was caught up in what we in this country call the Arab Spring. So uncertainty, and unrest, and internal strife and it has just made it very difficult.

So you had prepared materials for that contract and then could not deliver them or use them elsewhere?

That is correct because they were specialized products. We have some salvage value of these structures but the delta between what we thought we were going to get for the structures and the salvage value is what we wrote off.

A couple of other quick follow ups, I'm assuming embedded in your guidance for the upcoming year in the EIPPs your not assuming any highway bill or major tifia funds impacting highway related demand, I'm assuming that is embedded in your views, correct?

That is correct.

Last conference call I think you mentioned when people were pressing you on the capital allocation that you had billions of opportunities in the pipeline. Is the pipeline essentially the same that you were looking at or has some material change occurred in the candidates you are considering?

No it's essentially the same pipeline and we have ongoing not only evaluation of the pipeline, but talks with potential targets and some of those are not ready to move and some that are ready to move, were ready to move, got a higher price than they would've gotten from us.

My final question is Terry McClain's wife asked me to ask you what the status of the CFO search is?

I think she's going to be happy having him home pretty soon.

David Rose, Wedbush Industries.

A follow up to the question about guidance for the remainder of the year, I think there was a question about what you expected to see the back half improve. Just to be clear, you were talking about some optimism around acquisitions. You're not including acquisitions in that guidance to see things better for the second half of the year, is that correct?

Not currently.

Jodi are there any more questions in the queue?

No Sir, there are no further questions.

Thank you, at this time this concludes our call. 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 statement.

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 acceptance of new products, product pricing, domestic and international competitive environments, and functions, 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 statements. Thank you. That concludes today's conference call. You may now disconnect.