Valmont Industries Inc (VMI) 2014 Q2 法說會逐字稿

Good morning. My name is Jodi, and I will be your conference operator today.

At this time, I would like to welcome everyone to the Valmont Industries Incorporated second-quarter earnings call.

(Operator Instructions)

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

Thank you, Jodi, and welcome to the Valmont Industries second-quarter 2014 earnings conference call. With me today are Mogens Bay, Chairman and Chief Executive Officer; Mark Jaksich, Executive Vice President and Chief Financial Officer; and Tim Francis, 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 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, and I trust you have all read the press release. In total, we had another quarter of difficult comparisons to our record second quarter of 2013, when both our Utility Support Structures and Irrigation segments were delivering exceptional results.

In the Utility Support Structure segment, we faced a more competitive market in North America, as the mix of business included a greater proportion of small projects compared with the second quarter of last year. Increased industry capacity has reduced last year's extreme tightness in the market, resulting in shorter lead times and a more competitive bidding for smaller projects. Although total volume was flat, there were fewer large projects, which tend to move more efficiently through our plants than the smaller projects that were in our second-quarter mix.

Utility operating income as a percent of sales fell below the midpoint of 15% we had predicted through the cycle, reflecting negative sales mix and fixed cost deleverage. We're implementing measures to reduce our cost structure in this environment. During the third quarter, we will consolidate the operations of a small plant into a larger facility in Texas.

We do maintain a positive outlook for this market. The current regulatory environment encourages utility investments to improve the reliability of the grid. Discussions with our customers reinforce this outlook, as there are a number of large transmission projects in the pipeline. They are planned over the next few years. Our multiple plant locations across North America and engineering expertise and our customer relationships should continue to allow us to capture a significant piece of the North American utility opportunity.

In the Irrigation segment, the second quarter selling season was more typical than what we experienced in 2013. We did not have a significant backlog carryover like we did last year. Lower commodity prices and expectations for reduced net farm income probably also dampened market activity.

Sales in international irrigation markets increased, led by gains in Brazil, the Pacific region, and the Middle East. Even though a decline in global commodity prices would be expected to also soften international markets, other factors, such as government support programs or policies to encourage investment in agriculture, can offset the impact of lower crop prices in various markets. The Irrigation segment operating income quality was higher at 19% of sales, despite the revenue decline.

In the Engineered Infrastructure Products segment, sales growth was largely driven by the March acquisition of Valmont-SM in Europe. Weakness in our Australian markets led to lower sales of engineered access systems. However, other international markets experienced modest organic growth. Engineered Infrastructure Products operating income increased, due to the contribution from Valmont-SM. Operating income as a percent of sales for the segment was up from last year. We continue to be pleased by the improvement in the quality of earnings in this segment, despite headwinds in several of our markets.

In the Coatings segment in North America, the first quarter weather-driven weakness spilled over into the early weeks of the second quarter. Later in the quarter, we saw improved volumes. Intercompany volumes were lower for both Irrigation and Utility. In the Asia-Pacific region, weakness in the Australian mining economy, which drives a significant part of our galvanizing business there -- we saw that in a meaningful decline in volumes.

Coatings segment operating income decreased from 25% to 19% of sales, reflecting the volume deleverage in Australia and the one-time gain of $4.6 million from the sale of a galvanizing facility in Western Australia last year. We're implemented initiatives to reduce our cost structure in Australia in response to current market conditions.

Turning to other financial measures -- depreciation and amortization for the quarter was $24 million. Capital expenditures were $23 million. And for 2014, we expect depreciation and amortization of about $80 million and capital spending of approximately $100 million.

As of yesterday, we have repurchased 1 million Valmont shares since we announced our repurchase authorization on May 13. We have 340 million remaining on our authorization. The second quarter earnings impact of the buyback was insignificant at less than $0.01 a share. This quarter, the change in the quoted market value of the EMD shares held on Johannesburg Stock Exchange in South Africa did not impact earnings per share.

Looking towards the remainder of the year. In the Engineered Infrastructure Product segment, acquisition and organic growth should result in positive sales comparisons and improved profitability. In the Utility Support Structure segment, we expect second half revenue at similar levels to last year but at lower profitability. In the Irrigation segment, the outcome hinges mainly on the new proxies in the North America and its impact on buyer behavior. Revenues and quality of earnings during last year's second half were not at the lofty levels we experienced during the first half of 2013.

At this time, for the second half of 2014, we are forecasting results for this segment at approximately the same level as last year, as farmers' balance sheets remain strong and the sentiment we hear from our dealer network is positive. As always, a new selling season will start in the fall, and it's difficult to predict. However, recent crop reports and a softening of corn prices is a concern.

In the Coatings segment, our current outlook is for similar results to 2013's second half.

In summary we are confirming our previous guidance of diluted earnings per share in the range of $9.35 to $9.65 for 2014. This guidance excludes the impact of any future share repurchases and is predicated on our current view for somewhat flat second-half profitability comparisons in the irrigation segment. When we announce third-quarter earnings, we will update our guidance and include the impact of our share repurchase. Through the second quarter, the impact has been less than $0.01 a share.

We will now take your questions.

Jodi, we are ready to enter the Q&A session.

(Operator Instructions)

Nathan Jones, Stifel Nicolaus.

Good morning (technical difficulties).

Good morning.

Obviously some difficult market conditions out there at the moment.

I think I would like to start on utility. Can you possibly give us any color on what the contributions of the drop in margin are, in terms of volume deleverage, the impact of the mix, and the impact of price? Either quantitatively or just qualitatively?

I don't think we want to get into breaking down the various components of the earnings drop. But as I said, volume was pretty flat.

So it's a result of price and deleverage that we've seen the drop in operating income. And the price pressure has been mostly on smaller projects.

That also adds to the difficulty of effectively and efficiently putting projects through the plants. The longer lead times we have, and that tends to be for larger projects, the better we can prepare and the more efficiently we can produce.

Yes. I do understand how that works in your business. Have you seen the pressure (technical difficulty)?

You are breaking up, Nathan.

I'm sorry.

Have you seen the price pressure increase in the last quarter? Or has it stayed the same? I don't think it probably has gotten any better.

No, I think it has stayed the same.

Stayed the same?

So I would think -- and based on our work -- that the large project environment probably improves going into 2015. And I'm sure you look at the same data. Should that happen and volumes increase in the industry, how quickly do you think margins can improve, going into and through 2015?

Well, I think it depends on the mix as we go into 2015. And it depends on the number of large projects and, therefore, the mix of projects which we send through the plants.

If that comes to pass, I think we should see an improvement in profitability. To what extent and how fast all depends on order flow and the environment in the marketplace at the time.

Would that be your expectation, at this point in the year?

Would our expectations be that margins would improve next year?

Yes.

The expectations would be that margins would improve if the mix improves for larger projects and better visibility. But we don't know yet.

Okay. Well, I think that's probably what is going to happen, but thanks for the color. I appreciate your time.

Arnie Ursaner, CJS Securities.

Hi. Good morning.

Staying on the topic of utilities. It's been an engine of growth for the last several years and yet, has gone through a very rapid change.

Mogens, in your view, what has caused this? And what actions is Valmont going to take in reaction to the dramatic and rapid change in the industry?

Well, first of all, let's start with volume. Volume has actually been hanging in there pretty well. As I said, our volume was pretty flat. But as the growth rate in the industry has tapered off, and as additional capacity has been added, not only by us, but be the rest of the industry. We are in a situation where lead times have been shrinking quite dramatically.

Some of the pricing we have seen on smaller projects over the long-term, would be unsustainable for participants. So I would expect -- or maybe it's more a hope than an expectation that, that will change over time.

We're going to see a change in the ownership of one of the big players. Thomas & Betts' structural business were sold to Trinity.

And Trinity is a good industrial concern. They paid $600 million. They'd want a good return on that investment.

I think we'll see good discipline. And throughout history, Tomas & Betts has been a good competitor and a disciplined competitor in this marketplace.

Now, what can we do? There's a lot of things we cannot control -- the general pricing environment in the market. But what we do control is the focus on more productivity improvements.

During the last number of years, we have been focused on keeping up with the rapidly increasing market. And therefore, have probably spent less time on how effectively and efficiently can we produce these products.

So we're going to get into a mode -- like we have been in the engineered infrastructure product segment when they faced headwinds -- where we focus more on productivity improvements. How do we have the most efficient plant network? How do we use it and leverage it the most efficiently?

Our focus, going forward, will turn more internally in the sense of what we do control. And in EIP -- engineered infrastructure products -- we have seen good results from that because that external market has really not improved very much. And we have improved, over the last few years, the quality of our earnings. All else being even, I hope we'll see some of the same results in the utilities side of the business.

Would it be fair to say that Trinity -- I'm sorry -- that Tomas & Betts, in preparation for the sale of its unit, may have taken on some business aggressively just to build backlog? Is at a scenario that you would envision?

Well, this is -- I don't know. But clearly, when a company is going through a sales process, it can create some uncertainty and some confusion. I am pleased that, that process has come to an end.

And I am actually pleased that the business ends up with Trinity. Trinity is a good company. And they are in business to have good returns on their invested capital.

Okay.

And a clarification, if I can, on your share repurchase. You indicated you bought 1 million shares, said you would 340 million left. I assume you meant three and $340 million, not --

That's correct.

Just to clarify. That's it for me. Thanks.

Thanks

Brian Drab, William Blair.

Hi. Good morning.

Good morning, Brian.

First question is on the utility segment. You mentioned that you're going to be consolidating a small plant. Can you quantify at all how much capacity you are taking off-line -- maybe in terms of revenue capacity?

The small plant we're consolidating into our larger plant in Texas was more of a finishing plant. It didn't have the price break.

But it's a move that we will take a charge in the third quarter of about a couple of million dollars. And it will probably have less than a one-year payback. It is a good move from us, and it will hopefully continue to improve our productivity in that part of our business.

So it doesn't change your capacity?

No. Not in a meaningful way. It just utilizes the larger plant better.

Got it. Okay.

So you are expecting irrigation profitability in the second half of the year to be at about the same level as second half of 2013. I guess, I'm wondering if you could comment on the level of demand that you're expecting the second half of 2014 in terms of -- let me say this way.

In the second half of 2013, we had some demand, I think, driven by farmers buying in advance of expected changes in the 179 tax policy. I think the general outlook, or sentiment, for farmers was better than I would expect it to be in the second half of 2014. I'm wondering if you could provide a little more granularity, in terms of your outlook for irrigation, with respect to volume and margin.

Let me start by saying, when we say that we are planning for profitability in the second half at about the same level as last year's second half, I put a lot of qualifiers on that. The first one being that this time of the year, it's very difficult to predict.

Secondly, crop prices, as a result of forecasted yields and ending inventories, et cetera, keeps moving around. I think I mentioned in my prepared remarks that the recent crop reports and, therefore, further softening in corn prices, as an example, is a cause for concern.

So I would more look at it like -- we have no reason to predict anything different than what we saw in the second half of last year until we start seeing the beginning of the sales season and have a more clear view as to how farmers look at crop prices, net farm, cash income, ending inventories, et cetera.

Can you comment, Mogens, at all in terms of -- because you made the comment, pretty specifically, in terms of profitability for the second half of the year. Can you comment as to whether you expect volume to be flat, up, or down compared with last year?

Current expectations in the irrigation segment for planning purposes is for us to have flat volume and about flat profitability. As I have always said is, we don't spend a lot of time trying to predict at a time of the year when things are unknown.

We spent our time being ready to react to whatever happens. So if volume would be down, we will react to that like we have in the first half. If volume would be up, we'll react to that.

Got it.

And then just one last question, on the utilities side. Have you been somewhat surprised this year by the number of large projects that you have seen? And is this more a function of larger projects being broken up into smaller pieces, or just delays or cancellations of some of the larger projects?

In general, we would typically see more large projects in a quarter like we did this quarter. It's always difficult to predict exactly when they take place.

Some large projects have been postponed. Some have moved into 2015. But I have not heard of large projects that have been canceled.

Okay. Thank you very much.

Brent Thielman, D.A. Davidson.

Yes. Good morning.

Good morning, Brent.

Could you provide what the estimated cost savings is going to be for the plant consolidation in utility?

About $2 million a year.

Okay, great.

I guess, just to clarify on the large arteries in utility a little more. Can you define it for us?

What size you tend to see that margin differential? You used to talk about the 15 to 20% range. Obviously now, we're in the 12% to 14% range. What size of project do we see those better margins?

First of all, the bigger the project, the fewer the number of players that can actually participate. I would say, when you get the projects that are over $10 million, $20 million, you start getting into projects where some of the smaller new entrants may have difficulty participating in them.

But I won't give you a specific number, saying, this is a big project, this is a small project. When we talk about small projects, you're talking about projects of $2 million, $3 million, $4 million, or even less than that.

That's helpful. Okay. Thank you.

David Rose, Wedbush Securities.

Good morning. A couple -- one follow-up question, and maybe a little bit more on the utility support side.

If you're looking at the irrigation last quarter, margins seem to have held up quite well. You talked about some of the actions that you normally take in the last quarter. Maybe you could provide a little bit of color on what you did, specifically, to hold margins.

And maybe, perhaps, to Brian's question earlier, if you do see a decline in revenues -- under assumption that corn prices and net farm income have a depressing impact on revenues -- what you need to do to manage margins? What do you expect to do?

Again, there are things we are in control of and things we are not. The things we're not in control of is the general competitive pricing environment. And so far, we have seen good pricing discipline in the irrigation market. That's probably the main reason why the quality of earnings has stayed as high as it has, and hopefully, that will continue.

What we can do internally is flex our direct labor force very quickly. And having been in this business for five or six decades, we know how to do that. And we react very fast, either way.

Now, in a general SG&A sense, there are things you can do on projects. You can postpone, you can accelerate, you can cancel.

But there are also parts of our SG&A expenses that we think are good investments for longer-term improvement in this business. And we will probably hang on to those, even though there may be some pressure on the business. But the biggest thing is to flex your direct labor very quickly, either way.

Okay.

So if we see a modest decline in revenues, you should be able to react to that vis-a-vis your expectations -- modest?

We will react to a modest decline in revenue or a modest increase in revenue very quickly.

Okay.

And secondly, on the utility support structure side of the business, maybe you can provide a little bit of color on market share gains or losses. Do you think you picked up market share? Do you think you lost market share in the quarter?

There are no reporting functions. So what you keep an eye on is projects you win, projects you lose. You don't necessarily know of every single project, but all in all, in our business reviews with our utility segment, we expect our market shares to have stayed flat.

How much -- your win rate. Would you say that's improved or declined?

Well if our market share stayed flat, our win rate has probably stayed flat, too.

That's fair. Thank you.

Kevin Bennett, Sterne Agee.

Good morning, gentlemen. How are you guys doing?

Wonderful, Kevin. How are you?

I'm great. Thanks for taking the questions.

The first one on irrigation. Have you guys seen any pricing pressure in 2Q start to develop? Or has that remained constant?

In total, as I just said, I think the industry has stayed fairly good when it comes to pricing discipline. There are always pockets somewhere in the world or somewhere in the country where you will see some more competitive environment for a period of time. But in total, I think we should be pleased with the pricing discipline we are seeing in this business.

Got you. That is great.

And then, Mogens, is there anyway that you can quantify the US decline versus the international growth in the irrigation business?

Yes, but we don't break that out. But as I did say, international business grew in this quarter, also.

Yes. Okay.

And North America, obviously, declined. And the international growth was not insignificant

Okay. Thank you for that.

A couple of more quick ones. In the coatings segment, could you remind us how much of that is Australia versus North America?

Australia is part of our Asia-Pacific region. And the North American business is still well over half of our total segment business.

But in Australia, the exposure to the mining industry is significant for the galvanizing businesses there. As you know, mining activity has been under pressure for a while in Australia.

We have also had to deal with currency translation expenses. And, I think, we're going to see those comparisons being better, going forward, because most of the decline in the Australian dollar took place in the first half of last year, as compared to the second half.

Got you. Thanks.

And lastly for me, Mogens, just on the M&A front -- any comments there? What would you say is the likelihood that we complete another deal this year?

Every deal is a miracle. We have a number of activities going on in M&A. And we can't predict when any of those may come to fruition.

But despite our repurchase program for our stock, we have plenty of dry powder to pursue acquisitions that we can get at the right value. There are plenty of companies out there that could be acquired.

The question is, can you acquire them at a value that, not only do you get EPS accretion -- which is a short-term benefit -- but where you really can beat your cost per capital. That's the only way you're going to create shareholder value over the long-term. And we are going to stay disciplined in doing the best we can to make sure that we can beat our cost per capital with those acquisitions.

Got you. Sounds good to me.

Thank you, guys. I appreciate it.

Schon Williams, BB&T capital.

Hi. Good morning.

Good morning, Schon.

Mogens, maybe just to piggyback off the last caller.

You've been through a number of cycles on the irrigation side. I'm just wondering, given that international is holding up so much better than the domestic side of the business, do think that, that's a sustainable trend over the next two to three quarters? Has there been -- in your past history, have there been periods where you've seen the international business diverge from what you've seen domestically over a long period of time?

You added, over a long period of time, and I can't affirmatively comment on that. But yes, there's been periods of time where international business has been going up and North America down. But the converse has also been the case, where North American business has grown rapidly and international have not or have declined.

I think the reason why international, in that sense, is a more stable business is that it is so diverse, geographically in particular. But also from a crop standpoint. Many different crops around the world drive that business.

And then, the whole issue of government policies and interference or support of agricultural investments. If you look at countries like Australia, there are certain set of drivers there. The dairy industry in New Zealand.

It could be sugarcane for ethanol production in Brazil. It could be financing in Brazil.

You go from country to country, and you have different drivers for the business. And yes, commodity prices tend to be global, but you have offsetting good drivers in some of those countries.

I would say, in summary, the geographic diversification of our international business makes it less cyclical than what we would typically see in a concentrated market like North America. Both on the upside, and on the downside.

That's helpful color. I appreciate it.

Touching on the coatings here, obviously some headwinds in Australia there. It sounds like you're expecting some improvement in the back half of the year.

You actually had fairly good margins in that business in the back half of last year. And you're expecting, it sounds like, similar returns in the back half of this year.

I am trying to appreciate -- what do you see actually improving in the back half of the year? It doesn't sound like Australia is turning just yet. Is that more North America getting better, or what should we expect to improve in the back half, in order to get the margin of profitability profile similar to where we were last year?

As I have said repeatedly, if we can have operating income in that business close to 20% as a segment, we will be very pleased. In the first half of this year, particularly driven by a very tough winter, we had some difficulties in the North America coatings business. It spilled over a little bit into the second quarter.

I think that's going to be corrected. And we're going to see second half profitability in line with what we have expected and then delivered in the past.

In Australia, we have seen a decline in volume and, therefore, down there, we are addressing productivity. And we are addressing the cost structure. That should help us offset the volume decline we have seen there.

So we do expect to revert to more of a typical earnings picture in the coatings business in the second half

Would you be willing to quantify some of those savings down in Australia?

No, because they are widespread. It can be SG&A reductions. It can be consolidation of plants. It can be a different focus on customers.

It's not one big thing where we say, we did this, and that's going to change the cost picture in Australia. It's doing a whole lot of different things to improve the cost picture there.

Okay. Thank you.

Julian Mitchell, Credit Suisse.

Hi, guys. This is Charlie in for Julian.

Hi, Charlie.

Just had a question, first, in the EIP segment -- how you guys had mentioned before that, absent any change in volume, that you felt like 10% was pretty good margin in that business. I just didn't know, with the SM acquisition -- I know at the time, you guys said they had similar operating characteristics to you guys. I just didn't know if there would be any synergies that you guys might be able to find, or whether 10% is still a good number in that business.

I think, if we can get 10% operating income without some tailwinds in some of the markets where we have recently seen headwinds like, as you saw, Congress kicked the can down the road again with a short-term extension of funding for the Highway Trust Fund. And until we get some leadership there, I don't think we're going to get solid double-digit operating income in the North American businesses.

In Asia-Pacific, we've had pretty good profitability in EIP there, despite the fact that Australian economy has had a slowdown over the last year, year-and-a-half. We absorbed some expense in connection with translation of a weakening Australian dollar to US, but I think the comparisons there are going to be okay, going forward.

In Europe, the acquisition of Valmont-SM is at about the same profitability level as the segment in total. Our European businesses are operating at -- not double-digit operating income -- but maybe mid-single digits. And I think that will be the case until we see European investments in infrastructure reverting to we've seen in the past.

In total, I don't think the acquisition of Valmont-SM will move the quality of earnings needle in EIP. Obviously, it added to the earnings in EIP.

Okay. Thanks.

Obviously, just for the rest of the segments we've seen -- outside of EIP -- we've seen sales declines for all of the segments in the first half. Obviously, we cited extremely difficult comparisons in irrigation. And that's one of the reasons you guys are citing for a flat back half of the year.

Outside of currency in Australia, are there any other issues you'd call out for some of the other segments to maybe give us confidence that the volumes wouldn't fall? So sales declines in utility? Or sales declines in coatings or in the other segment?

I think, in the utility segment, we expect about flat sales for last year's second half in the second half of this year.

In EIP, I don't think we're going to have major currency translation issues. And we expect a modest increase in activity from a revenue standpoint in the segment.

We expect, unless there's an acquisition in the coatings business -- and I'm not protecting it -- coatings revenue will probably be about flat with what we saw last year's second half.

Okay.

And then, just as a housekeeping item. Just based on the share repurchases you guys have completed, the back half of the year -- you're expecting share count around 26 million shares? About 1 million lower than where you ended this quarter. Is that correct?

If we didn't buy anything else, yes, it would be 1 million less shares outstanding in the second half of the year. But we're only one third through our authorization, and we'll continue to participate in the market and continue to add to that million shares we have already repurchased.

Okay.

But just in terms of the -- for context -- of the 935,000 to 965,000. That wouldn't include any additional purchases, right?

That is not included in that number.

Okay. Thanks.

(Operator Instructions)

Jon Braatz, Kansas City Capital

Good morning, Mogens.

Good morning, John.

Just a question about the additional industry capacity in the utility area. Have you seen some of new capacity that could handle the big transmission powers, or is it more isolated just to the smaller projects? I'm trying to get a sense that when the big projects return, would you be able to achieve similar margins to what you've seen in the past?

That is several questions in one.

Mm-hmm.

I would say that the small players in the industry have not added capacity for very large structures. The very established players, such as Thomas & Betts, probably can handle some of those structures.

On the profitability level, it's tough to predict. But the profitability levels we saw in the last couple of years, which was the result of a fast-growing industry and tight capacity, allowed the industry to have, probably, exceptional profitability. And then it attracts new players, which then will put a damper on profitability.

So do I think we will return to 17%, 18%, 19% operating income, even if large projects come back? I don't think so.

Do I think that we should operate in the mid-teens in operating income if we have a little better environment than we have today? I would think so.

Okay. All right. Thanks, Mogens. I appreciate it.

Arnie Ursaner, CJS Securities.

Hi.

On the Valmont-SM acquisition that you made, it did $47 million in the quarter. And I'm looking back, when you acquired it, it had annual revenues of about $190 million. Can you comment on seasonality and if that business is growing?

I would say there's not a lot of seasonality in that business. And I think we can expect about $190 million, $200 million in that business.

It is not a fast growth business. You may see a few percentage points up or down in that business. But it is a pretty stable business with a fairly good visibility and backlog that we, pretty much, can see what's going to happen the rest of this year in that business. And I would say, you're going to see about that level of total revenue.

And based on backlog, how should we think about growth for next year?

It's too early to say.

Thank you.

Schon Williams, BB&T Capital

Hi. Thanks for taking my follow-up.

I just wanted to comment. Last quarter, Mogens, you mentioned that there were some projects in Q1 on utility side that had gotten pushed out into Q2. Have those all been delivered, at this point?

Yes. Those that were pushed out from one to two have been delivered.

And there have been, also, projects -- as I said before -- that have moved out through the quarters. And some projects have moved from the fourth quarter into 2015. Projects that are still going to take place, but at a different timing. As I mentioned before, we have not heard of large projects where utilities have abandoned these projects.

Okay.

And just so I'm clear -- your expectation for the back half of the year is for volume to accelerate on utility. That will still be offset by pricing.

So we'd be looking at flat sales for the back half of the year. But you are expecting volumes to accelerate in the back half?

Yes. Accelerate sounds like a big jump.

We are expecting revenue to be about flat. And if pricing is less favorable than it was last year, it would mean that the volume would be up a little bit from last year.

That's helpful. I appreciate it.

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

Thank you, Jodi. 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 for to speak to you again next quarter. And at this time, Jodi will read our statement on forward-looking disclosures.

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 develop months, 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 actions and policy changes optimistic 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.