As a global slowdown threatens to take hold, I'm afraid earnings reports like the one just released by Valmont Industries (NYSE:VMI) are going to become few and far between. Valmont sells light poles, among other things, and the firm fittingly lit it up this quarter.
Firm-wide, the top line grew 33% year over year, and operating leverage kicked EBIT growth up by 64%. Strength was evident across the board, but it's worth honing in on Valmont's various segments to see where the major growth drivers are. This company's got two major divisions, so let's start with infrastructure products, which is the larger of the two.
Within infrastructure, Valmont specializes in poles. You know -- street lights, traffic signals, electric transmission, exotic dancing. OK, strike the last one -- I don't believe Valmont has tackled that niche market just yet. But along with Ameron (NYSE:AMN), Valmont provides for most of our pole needs. So between the engineered support structures and utility support structures segments, poles play a prominent role.
The utility business was the real standout here, with 43% sales growth. Considering the current and future revamp of our nation's transmission and distribution infrastructure by Quanta Services (NYSE:PWR), ITC Holdings (NYSE:ITC), and others, this is a mighty fine line of work to find oneself in.
Valmont's coatings segment provides galvanizing and anodizing services for steel and aluminum products, respectively. Galvanizing is a basic way to protect steel from rust and corrosion. You pick up some zinc from Horsehead Holdings (NASDAQ:ZINC), bond it to the product surface, and voila. Another company in this line of work is AZZ (NYSE:AZZ), if you're suddenly interested in learning more about the marvels of metal coating. What's most relevant to our discussion here is that zinc prices are in the tank, which has done wonders for this segment's profitability.
Let's wrap up with a look at agriculture, an area where Valmont crosses swords with crosstown competitor Lindsay (NYSE:LNN). Both companies, as suppliers of mechanized irrigation systems, are reaping the rewards from fat farm budgets. Unit volume was strong, and operating income in this segment exploded 185% higher. Within a strong portfolio of businesses, this irrigation segment is truly the ace up Valmont's sleeve.
Valmont's rated a middle-of-the-road three stars in Motley Fool CAPS. Got irrigation insight? Pole prognostications? Share your outlook with the rest of us by rating the firm right here.
