Valmont Industries, Inc. Q4 2007 Earnings Call Transcript

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2008-02-15 08:55:08.0

Tags: Valmont Industries Inc.

Question-and-Answer Session

Thank you. [Operator Instructions]. Your first question is from the line of Arnie Ursaner with CJS Securities.

Robert Labick - CJS Securities

Good morning. Its Rob Labick backing up for Arnie Ursaner.

Mogens C. Bay - Chairman and Chief Executive Officer

Good morning Rob.

Robert Labick - CJS Securities

Good morning. Congratulations for the strong quarter.

Mogens C. Bay - Chairman and Chief Executive Officer

Thank you.

Robert Labick - CJS Securities

I wanted to start with the ESS segment. You mentioned that the plant consolidation and some charges in the quarter impacted the profitability. Is it possible for you to quantify the impact of the charges of the consolidations, so we can get a true measure of what the operating margins would have been in the quarter?

Mogens C. Bay - Chairman and Chief Executive Officer

Well, probably, the direct charge associated with the close and there are probably a couple of pennies a share. But then of course that we had operational challenges also in that quarter, as we went through this and I can't quantify exactly what they are going to add up to.

Robert Labick - CJS Securities

Okay, but that's completely behind us now, so Q1 and beyond we should be back to the normalized margins you would expect?

Mogens C. Bay - Chairman and Chief Executive Officer

Well in that... the plant we closed was the one we had the most difficulty with from a profitability standpoint. We are now incorporating most of those sales into a plant in Plymouth, Indiana. The one we closed was in Selbyville, Delaware.

Robert Labick - CJS Securities

Great. And then you touched on this, certainly, but your comment in the press release regarding the potential highway spending in traffic. Is that more of a cautionary plus anecdotal or are you beginning to actually see changes in ordering patterns at this point?

Mogens C. Bay - Chairman and Chief Executive Officer

Well I would say that it's probably more on kind of what you hear and what you read about budget prices in states and budget problems on the federal level too. I would say that we may have seen a slowdown in a couple of states, but we haven't seen a broad based lowering of activity levels. But it's one of those things that we need to keep eye on.

Robert Labick - CJS Securities

Great. Okay and then last question and I will get back in queue. In the Irrigation segment, obviously the results were terrific. Could you just discuss, I guess do you have the capacity for the multiyear growth that you are expecting in this? Is there any need for additional infrastructure there and where you are in terms of utilization and margin expansion in that segment?

 

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