Why Valmont Industries, Inc. (NYSE: VMI) stock is going gangbusters today

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Valmont Industries, Inc. (NYSE: VMI) stock rose over 7% on 23rd July, 2020 (as of 12:59 pm GMT-4; Source: Google finance) after the company posted better than expected results for the second quarter of FY 20. Beginning late in the first quarter, lots of Valmont manufacturing facilities outside of the U.S. were closed due to the COVID-19 pandemic. During the second quarter, all facilities had resumed operations. Incremental expenses related to the pandemic during the second quarter were approximately $2.5 million. At the beginning of the second quarter the Company preemptively had withdrawn 75.0 million of its $600.0 million revolving credit facility to ensure sufficient liquidity for business operations. This amount was however repaid in full during the second quarter. The Company has no significant long-term debt maturities until 2044.

VMI in the second quarter of FY 20 has reported the adjusted earnings per share of $2.00, beating the analysts’ estimates for the adjusted earnings per share of $1.44. The company had reported 1.7 percent fall in the adjusted revenue to $688.8 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $653.87 million. Excluding $13.7 million of unfavorable currency impacts, the company’s sales were similar to last year, due to strong growth in Utility Support Structures was offset by lower sales in the Coatings segment due to COVID-19 impacts. Utility Support Structures Segment’s sales grew 10.2% year-over-year to $231.3 million, while there is 18.7% fall in the Coatings Segment’s sales to $80.0 million.

For third quarter, the company expects the net sales to be in a range of $680.0 million to $700.0 million, Operating Profit Margin is expected to be in the range of 8.0% to 9.0% and Utility Support Structures segment is expected to post sales growth of about 20% compared to prior year. 2020 capital expenditures are projected to be in the range of $80.0 to $90.0 million to support strategic future growth initiatives.

Meanwhile, during the second quarter, the Company had  purchased a majority stake in Solbras – Energia Solar do Brasil, which is a leading provider of solar energy solutions for agriculture that allows Valmont to deliver a first-to-market, advanced solar power and monitoring solution to growers. The Company has also expanded its global technology leadership position with the asset purchase of PrecisionKing, which is a subscription-based provider of control technology and remote monitoring solutions for the U.S. market.

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