Valmont (NYSE:VMI) Misses Q1 Revenue Estimates

Yahoo

22-04-2025

Infrastructure and agriculture equipment manufacturer Valmont Industries (NYSE:VMI) missed Wall Street's revenue expectations in Q1 CY2025, with sales flat year on year at $969.3 million. On the other hand, the company's outlook for the full year was close to analysts' estimates with revenue guided to $4.1 billion at the midpoint. Its GAAP profit of $4.32 per share was 0.8% below analysts' consensus estimates.
Is now the time to buy Valmont? Find out in our full research report.
Revenue: $969.3 million vs analyst estimates of $975.5 million (flat year on year, 0.6% miss)
EPS (GAAP): $4.32 vs analyst expectations of $4.36 (0.8% miss)
Adjusted EBITDA: $149.8 million vs analyst estimates of $157.4 million (15.5% margin, 4.8% miss)
The company reconfirmed its revenue guidance for the full year of $4.1 billion at the midpoint
EPS (GAAP) guidance for the full year is $18 at the midpoint, roughly in line with what analysts were expecting
Operating Margin: 13.2%, in line with the same quarter last year
Free Cash Flow Margin: 3.6%, up from 0.9% in the same quarter last year
Backlog: $1.49 billion at quarter end
Market Capitalization: $5.41 billion
President and Chief Executive Officer Avner M. Applbaum commented, 'Most of our end markets are showing resilience against the current backdrop of economic uncertainty, driving growth in key parts of our business. We're seeing continued strength in Infrastructure, particularly Utility and Telecommunications, as well as solid demand trends in International Agriculture. Our infrastructure capacity investments are beginning to ramp up and are expected to contribute to sales growth as the year progresses. In Agriculture, strong international performance, especially from large-scale projects, is offsetting softness in the North American market. Our first-quarter results reflect disciplined execution and steady progress on our strategic priorities, which help us remain agile while navigating dynamic conditions, including tariff impacts. Across the organization, we're executing well and remain confident in our full-year outlook, while also being alert to the rapidly-evolving environment in which we operate, as we deliver value for our customers and shareholders.'
Credited with an invention in the 1950s that improved crop yields, Valmont (NYSE:VMI) provides engineered products and infrastructure services for the agricultural industry.
Traditionally, building materials companies have built competitive advantages with economies of scale, brand recognition, and strong relationships with builders and contractors. More recently, advances to address labor availability and job site productivity have spurred innovation. Additionally, companies in the space that can produce more energy-efficient materials have opportunities to take share. However, these companies are at the whim of construction volumes, which tend to be cyclical and can be impacted heavily by economic factors such as interest rates. Additionally, the costs of raw materials can be driven by a myriad of worldwide factors and greatly influence the profitability of building materials companies.
Reviewing a company's long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Luckily, Valmont's sales grew at a decent 8.1% compounded annual growth rate over the last five years. Its growth was slightly above the average industrials company and shows its offerings resonate with customers.
We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Valmont's recent performance marks a sharp pivot from its five-year trend as its revenue has shown annualized declines of 4.2% over the last two years. Valmont isn't alone in its struggles as the Building Materials industry experienced a cyclical downturn, with many similar businesses observing lower sales at this time.
This quarter, Valmont missed Wall Street's estimates and reported a rather uninspiring 0.9% year-on-year revenue decline, generating $969.3 million of revenue.
Looking ahead, sell-side analysts expect revenue to grow 1.2% over the next 12 months. Although this projection indicates its newer products and services will spur better top-line performance, it is still below the sector average. At least the company is tracking well in other measures of financial health.
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Valmont has done a decent job managing its cost base over the last five years. The company has produced an average operating margin of 9.5%, higher than the broader industrials sector.
Looking at the trend in its profitability, Valmont's operating margin rose by 4.9 percentage points over the last five years, as its sales growth gave it operating leverage.
This quarter, Valmont generated an operating profit margin of 13.2%, in line with the same quarter last year. This indicates the company's cost structure has recently been stable.
Revenue trends explain a company's historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.
Valmont's EPS grew at an astounding 19.4% compounded annual growth rate over the last five years, higher than its 8.1% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.
We can take a deeper look into Valmont's earnings to better understand the drivers of its performance. As we mentioned earlier, Valmont's operating margin was flat this quarter but expanded by 4.9 percentage points over the last five years. On top of that, its share count shrank by 6.3%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.
Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.
For Valmont, its two-year annual EPS growth of 18.7% is similar to its five-year trend, implying strong and stable earnings power.
In Q1, Valmont reported EPS at $4.32, in line with the same quarter last year. This print was close to analysts' estimates. Over the next 12 months, Wall Street expects Valmont's full-year EPS of $17.18 to grow 7.9%.
We struggled to find many positives in these results. Its EBITDA missed and its revenue fell slightly short of Wall Street's estimates. Overall, this quarter could have been better. The stock traded down 1.9% to $264.46 immediately following the results.
Valmont may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.