8-K
VALMONT INDUSTRIES INC (VMI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
July 20, 2022
Date of Report (date of earliest event reported)
Valmont Industries, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | |||
|---|---|---|---|
| (State or other jurisdiction of incorporation) | |||
| 1-31429 | 47-0351813 | ||
| (Commission File Number) | (I.R.S. Employer Identification No.) | ||
| 15000 Valmont Plaza | 68154 | ||
| Omaha | NE | ||
| (Address of Principal Executive Offices) | (Zip Code) |
(402) 963-1000
Registrant's telephone number, including area code
One Valmont Plaza, Omaha NE 68154
__________________________________________________________________________________
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $1.00 par value | VMI | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Item 2.02. Results of Operations and Financial Condition.
Valmont Industries, Inc. issued a press release on July 20, 2022 announcing its financial results for its fiscal quarter ended June 25, 2022. The press release, along with the presentation to be used during its earnings call on July 21, 2022, are furnished with this Form 8-K as Exhibit 99.1 and Exhibit 99.2, respectively.
The information in this Item 2.02 is being furnished and shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section. The information in this Item 2.02 shall not be incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933, as amended.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | Press Release dated July 20, 2022 |
| 99.2 | Presentation Slides for earnings call on July 21, 2022 |
| 104 | Cover Page Interactive File (the cover page XBRL tags are embedded in the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Valmont Industries, Inc. | ||
|---|---|---|
| Date: July 20, 2022 | ||
| By: | /s/ AVNER M. APPLBAUM | |
| Name: Avner M. Applbaum | ||
| Title: Executive Vice President and Chief Financial Officer |
Document
| FOR IMMEDIATE RELEASE | ||
|---|---|---|
| Contact: | Renee Campbell | |
| Email: | renee.campbell@valmont.com | |
| Date: | July 20, 2022 |
Valmont Reports Second Quarter 2022 Results and Raises Full-Year Guidance
Achieved Record Sales and Earnings per Share
Omaha, NE - Valmont Industries, Inc. (NYSE: VMI), a global leader that provides vital infrastructure and advances agricultural productivity while driving innovation through technology, today reported financial results for the second quarter ended June 25, 2022.
Second Quarter 2022 Highlights (all metrics compared to Second Quarter 2021 unless otherwise noted)
•Record Net Sales of $1.1 billion increased 26.9%
•Operating Income increased to $118.7 million, or 10.5% of net sales ($122.9 million or 10.8% adjusted1) compared to $82.6 million or 9.2% of net sales ($90.9 million or 10.2% adjusted1)
•Record Diluted Earnings per Share (EPS) of $3.53 ($3.70 adjusted1) compared to $2.89 ($3.06 adjusted1)
•Benefited from strong market demand across the portfolio, leading to a record backlog of $2.0 billion, an increase of 24.7% since the end of fiscal 2021, and an increase of 13.4% since the end of first quarter 2022
•Returned $21.5 million to shareholders through dividends and share repurchases
•Incurred an effective tax rate of 27.6% compared to 19.0% in 2021, primarily due to the geographic mix of earnings and an incremental U.K. tax benefit in 2021 that did not repeat in 2022
•Commenced production at the newly-built spun concrete pole manufacturing facility in Bristol, Indiana, that will be accompanied by a 500-kilowatt solar array expected to fully offset the site’s energy consumption
•Acquired a majority interest in ConcealFab, a leader in 5G infrastructure and passive intermodulation (PIM) mitigation solutions for the telecommunications market
1 Please see Reg G reconciliation to GAAP measures at end of document
Key Financial Metrics
| Second Quarter 2022 | GAAP | Adjusted1 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (000's except per share amounts) | 06/25/2022 2Q 2022 | 06/26/2021 2Q 2021 | vs. 2Q 2021 | 06/25/2022 2Q 2022 | 06/26/2021 2Q 2021 | vs. 2Q 2021 | |||||||||
| Net Sales | $ | 1,135,532 | $ | 894,629 | 26.9% | $ | 1,135,532 | $ | 894,629 | 26.9% | |||||
| Operating Income | 118,719 | 82,625 | 43.7% | 122,859 | 90,850 | 35.2% | |||||||||
| Operating Income as a % of Net Sales | 10.5 | % | 9.2 | % | 10.8 | % | 10.2 | % | |||||||
| Net Earnings | 76,108 | 62,110 | 22.5% | 79,682 | 65,752 | 21.2% | |||||||||
| Diluted Earnings Per Share | $ | 3.53 | $ | 2.89 | 22.1% | $ | 3.70 | $ | 3.06 | 20.9% | |||||
| Average Shares Outstanding | 21,541 | 21,469 | 21,541 | 21,469 | |||||||||||
| YTD 2022 | GAAP | Adjusted1 | |||||||||||||
| (000's except per share amounts) | 06/25/2022 FY 2022 | 06/26/2021<br>FY 2021 | vs. FY 2021 | 06/25/2022 FY 2022 | 06/26/2021<br>FY 2021 | vs. FY 2021 | |||||||||
| Net Sales | $ | 2,116,352 | $ | 1,669,515 | 26.8% | $ | 2,116,352 | $ | 1,669,515 | 26.8% | |||||
| Operating Income | 213,561 | 159,836 | 33.6% | 221,844 | 168,061 | 32.0% | |||||||||
| Operating Income as a % of Net Sales | 10.1 | % | 9.6 | % | 10.5 | % | 10.1 | % | |||||||
| Net Earnings | 138,419 | 117,124 | 18.2% | 145,570 | 120,776 | 20.5% | |||||||||
| Diluted Earnings Per Share | $ | 6.43 | $ | 5.46 | 17.8% | $ | 6.77 | $ | 5.63 | 20.2% | |||||
| Average Shares Outstanding | 21,516 | 21,449 | 21,516 | 21,449 |
"We delivered record quarterly revenue, an increase of 27% year-over-year, and record adjusted earnings per share that increased 21%," said Stephen G. Kaniewski, President and Chief Executive Officer. "Operating margin improvement was driven by our ability to successfully execute on pricing strategies, higher volumes, and better fixed-cost leverage. We continue to prioritize actions to better serve our customers by leveraging our global manufacturing footprint, strategically expanding capacity in key growth markets, and implementing sourcing strategies to help mitigate continuing supply chain volatility. We are seeing strong demand for our products and solutions across global infrastructure and agriculture markets and our Valmont teams around the world are doing an excellent job of delivering value to our customers every day. We are executing consistently on our strategy of creating sustainable growth across our businesses and long-term value for our shareholders."
Second Quarter 2022 Segment Review
Infrastructure (67.0% of Net Sales)
Products and solutions to serve the infrastructure markets of utility, renewable energy, lighting, transportation and telecommunications, and coatings services to preserve and protect metal products
Sales of $765.0 million grew 23.9% year-over-year with double-digit sales growth across all product lines, net of a 2.5% unfavorable foreign currency translation impact. Higher sales were driven by favorable pricing globally, primarily in the Transmission, Distribution and Substation (TD&S), Lighting and Transportation (L&T), and Telecommunications product lines, and higher volumes, notably in the Renewable Energy, Telecommunications and TD&S product lines.
Operating Income improved to $84.6 million or 11.1% of net sales compared to $61.6 million or 10.0% ($67.7 million or 11.0% adjusted1) in 2021, driven by favorable pricing and improved fixed-cost leverage, including SG&A.
On June 1, 2022, Valmont acquired a majority interest in ConcealFab, advancing the Company's growth strategy to deliver industry-leading 5G infrastructure solutions for the telecommunications market.
1 Please see Reg G reconciliation to GAAP measures at end of document
Agriculture (33.0% of Net Sales)
Center pivot and linear irrigation equipment for agricultural markets, including parts and tubular products; advanced technology solutions for precision agriculture
Sales of $377.8 million increased 34.0% year-over-year, led by higher average selling prices of irrigation equipment globally and higher volumes, notably in North America and Brazil. In Brazil, revenues grew more than $40.0 million year-over-year, demonstrating robust market demand for irrigation equipment and ag solar products.
Operating Income was $58.0 million, or 15.5% of net sales ($62.2 million or 16.6% adjusted1) compared to $42.0 million or 15.0% of net sales ($42.9 million or 15.3% adjusted1) in 2021. The benefit of higher average selling prices and additional volume leverage was partially offset by higher SG&A, including incremental R&D expense for technology investments.
Realignment of Reporting Segments
On April 6, 2022, the Company announced that it had realigned its reporting segment structure beginning with its first quarter 2022 financial results. The new reporting segments are Infrastructure (includes the previous segments of Utility Support Structures, Engineered Support Structures and Coatings) and Agriculture (a renaming of the previous Irrigation segment). A recast of comparable prior-year segment financial information for 2020 and 2021 affected by the change is available in a summary presentation on the Investors page at Valmont.com. The Company's historical GAAP balance sheet, income statement and cash flows are not affected.
Balance Sheet, Liquidity and Capital Allocation
The Company generated year-to-date operating cash flows of $68.0 million through strong earnings and managing working capital to mitigate supply chain volatility while supporting strong revenue growth. At the end of the second quarter, cash and cash equivalents were $154.6 million. Valmont purchased approximately $10.0 million of company stock in the second quarter and approximately $112.0 million remains on the current authorization with no expiration.
Increasing Full Year 2022 Financial Outlook and Updating Key Assumptions
The Company is increasing its 2022 full-year net sales and diluted earnings per share outlook from the previous indications that were communicated last quarter, and is providing updated key assumptions for the year.
| 2022 Full Year Financial Outlook | Previous Outlook | Revised Outlook |
|---|---|---|
| Net Sales Growth (vs. PY) | 11% to 17% | 20% to 21% |
| GAAP Diluted EPS1 | $12.30 to $12.80 | $12.90 to $13.30 |
| Adjusted Diluted EPS1 | $13.00 to $13.50 | $13.60 to $14.00 |
| Tax Rate | ~ 26.5% | ~ 27.5% |
| FX Translation Impact on Net Sales | 0.0% | ~ (2.0%) |
•Revised net sales growth is primarily due to favorable pricing to offset continued broad-based inflation
•Now expecting a full-year tax rate of ~27.5% due to the geographic mix of earnings
•Now expecting a ~2.0% unfavorable foreign currency translation impact on net sales vs. prior year
•Capital expenditures continue to be in the range of $110.0 - $120.0 million to support strategic growth and Industry 4.0 advanced manufacturing initiatives
Kaniewski continued, "We've had a very strong first half of the year and are increasing our full-year outlook based on this performance and several other positive factors, including our record backlog of $2.0 billion, which
1 Please see Reg G reconciliation to GAAP measures at end of document
reflects continued strong, global market drivers across our businesses and provides significant momentum as we look ahead to the balance of 2022 and into 2023. Additionally, broad-based market strength for infrastructure products and solutions that help deliver safety, security and reliability while also participating in the change to renewable generation sources across our markets, are driving robust demand globally. Favorable agricultural market fundamentals and continued heightened concerns over food security have led to increasing activity levels across global markets. While inflation and supply chain volatility continue, we remain focused on what we can control: leveraging the strength of our organization to deliver innovative products and solutions to our customers, maintaining cost discipline, advancing operational excellence, and executing on our pricing strategies. Additionally, our balance sheet is strong and gives us flexibility to execute our long-term strategic plan. Through our diversified business portfolio, organizational emphasis on ESG principles and return on invested capital focus, we are well-positioned to drive sustainable, profitable growth and deliver long-term value to our shareholders."
A live audio discussion with Stephen G. Kaniewski, President and Chief Executive Officer, and Avner M. Applbaum, Executive Vice President and Chief Financial Officer, will be accessible by telephone on Thursday, July 21, 2022 at 8:00 a.m. CDT by dialing 1-844-200-6205 or 1-646-904-5544 using access code 849925, or via webcast by pointing browsers to this link: Valmont Industries 2Q 2022 Earnings Conference Call. A slide presentation will simultaneously be available for download on the Investors page of valmont.com. A replay of the event can be accessed two hours after the call at the above link or by telephone at 1-866-813-9403 or 1-929-458-6194. Please use access code 917263. The replay will be available through 5:00 p.m. CDT on July 28, 2022.
About Valmont Industries, Inc.
For over 75 years, Valmont® has been a global leader in creating vital infrastructure and advancing agricultural productivity. Today, we remain committed to doing more with less by innovating through technology. Learn more about how we’re Conserving Resources. Improving Life.® at valmont.com.
Concerning Forward-Looking Statements
This release contains 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 developments and other factors believed to be appropriate under the circumstances. As you read and consider this release, 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, the continuing and developing effects of COVID-19 including the effects of the outbreak on the general economy and the specific economic effects on the Company’s business and that of its customers and suppliers, 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 material, availability and market acceptance of new products, product pricing, domestic and international competitive environments, geopolitical risks, and actions and policy changes of domestic and foreign governments. The Company cautions that any forward-looking statement included in this press release is made as of the date of this press release and the Company does not undertake to update any forward-looking statement.
1 Please see Reg G reconciliation to GAAP measures at end of document
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
(Dollars in thousands, except per share amounts)
(unaudited)
| Second Quarter | Year-to-Date | |||||||
|---|---|---|---|---|---|---|---|---|
| 13 Weeks Ended | 26 Weeks Ended | |||||||
| 25-Jun-22 | 26-Jun-21 | 25-Jun-22 | 26-Jun-21 | |||||
| Net sales | $ | 1,135,532 | $ | 894,629 | $ | 2,116,352 | $ | 1,669,515 |
| Cost of sales | 842,931 | 664,982 | 1,574,565 | 1,235,314 | ||||
| Gross profit | 292,601 | 229,647 | 541,787 | 434,201 | ||||
| Selling, general and administrative expenses | 173,882 | 147,022 | 328,226 | 274,365 | ||||
| Operating income | 118,719 | 82,625 | 213,561 | 159,836 | ||||
| Other income (expense) | ||||||||
| Interest expense | (11,386) | (10,436) | (22,649) | (20,435) | ||||
| Interest income | 285 | 186 | 512 | 497 | ||||
| Gain (loss) on investments (unrealized) | (2,342) | 1,177 | (3,405) | 1,068 | ||||
| Other | 2,073 | 4,204 | 5,715 | 7,653 | ||||
| Other income (expense), net | (11,370) | (4,869) | (19,827) | (11,217) | ||||
| Earnings before income taxes | 107,349 | 77,756 | 193,734 | 148,619 | ||||
| Income tax expense | 29,587 | 14,740 | 52,708 | 30,242 | ||||
| Equity in loss of nonconsolidated subsidiaries | (555) | (359) | (913) | (719) | ||||
| Net earnings | 77,207 | 62,657 | 140,113 | 117,658 | ||||
| Less: earnings attributable to non-controlling interests | (1,099) | (547) | (1,694) | (534) | ||||
| Net earnings attributable to Valmont Industries, Inc. | $ | 76,108 | $ | 62,110 | $ | 138,419 | $ | 117,124 |
| Average shares outstanding (000's) - Basic | 21,313 | 21,193 | 21,296 | 21,186 | ||||
| Earnings per share - Basic | $ | 3.57 | $ | 2.93 | $ | 6.50 | $ | 5.53 |
| Average shares outstanding (000's) - Diluted | 21,541 | 21,469 | 21,516 | 21,449 | ||||
| Earnings per share - Diluted | $ | 3.53 | $ | 2.89 | $ | 6.43 | $ | 5.46 |
| Cash dividends per share | $ | 0.55 | $ | 0.50 | $ | 1.10 | $ | 1.00 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
| Second Quarter | Year-to-Date | |||||||
|---|---|---|---|---|---|---|---|---|
| 13 Weeks Ended | 26 Weeks Ended | |||||||
| 25-Jun-22 | 26-Jun-21 | 25-Jun-22 | 26-Jun-21 | |||||
| Net sales | ||||||||
| Infrastructure | $ | 764,950 | $ | 617,604 | $ | 1,445,676 | $ | 1,167,250 |
| Agriculture | 377,765 | 281,965 | 684,345 | 511,629 | ||||
| Total | 1,142,715 | 899,569 | 2,130,021 | 1,678,879 | ||||
| Less: Intersegment sales | (7,183) | (4,940) | (13,669) | (9,364) | ||||
| Total | $ | 1,135,532 | $ | 894,629 | $ | 2,116,352 | $ | 1,669,515 |
| Operating Income | ||||||||
| Infrastructure | $ | 84,643 | $ | 61,550 | $ | 162,150 | $ | 115,999 |
| Agriculture | 58,046 | 41,984 | 95,521 | 80,732 | ||||
| Corporate | (23,970) | (20,909) | (44,110) | (36,895) | ||||
| Total | $ | 118,719 | $ | 82,625 | $ | 213,561 | $ | 159,836 |
Valmont has aggregated its business segments into two global reportable segments as follows.
Infrastructure: This segment consists of the manufacture and distribution of products and solutions to serve infrastructure markets of utility, renewable energy, lighting, transportation and telecommunications, and coatings services to preserve and protect metal products.
Agriculture: This segment consists of the manufacture of center pivot and linear irrigation equipment for agricultural markets, including parts and tubular products, and advanced technology solutions for precision agriculture.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
| Thirteen weeks ended June 25, 2022 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Infrastructure | Agriculture | Intersegment Sales | Consolidated | |||||
| Geographical market: | ||||||||
| North America | $ | 559,864 | $ | 203,488 | $ | (6,716) | $ | 756,636 |
| International | 205,086 | 174,277 | (467) | 378,896 | ||||
| Total | $ | 764,950 | $ | 377,765 | $ | (7,183) | $ | 1,135,532 |
| Product line: | ||||||||
| Transmission, Distribution and Substation | $ | 295,835 | $ | — | $ | — | $ | 295,835 |
| Lighting and Transportation | 246,652 | — | — | 246,652 | ||||
| Coatings | 90,321 | — | (4,200) | 86,121 | ||||
| Telecommunications | 78,539 | — | — | 78,539 | ||||
| Renewable Energy | 53,603 | — | — | 53,603 | ||||
| Irrigation Equipment and Parts, excluding Technology | — | 347,585 | (2,983) | 344,602 | ||||
| Technology Products and Services | — | 30,180 | — | 30,180 | ||||
| Total | $ | 764,950 | $ | 377,765 | $ | (7,183) | $ | 1,135,532 |
| Thirteen weeks ended June 26, 2021 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Infrastructure | Agriculture | Intersegment Sales | Consolidated | |||||
| Geographical market: | ||||||||
| North America | $ | 421,168 | $ | 156,037 | $ | (4,940) | $ | 572,265 |
| International | 196,436 | 125,928 | — | 322,364 | ||||
| Total | $ | 617,604 | $ | 281,965 | $ | (4,940) | $ | 894,629 |
| Product line: | ||||||||
| Transmission, Distribution and Substation | $ | 220,458 | $ | — | $ | — | $ | 220,458 |
| Lighting and Transportation | 215,247 | — | — | 215,247 | ||||
| Coatings | 80,346 | — | (2,796) | 77,550 | ||||
| Telecommunications | 54,102 | — | — | 54,102 | ||||
| Renewable Energy | 47,451 | — | — | 47,451 | ||||
| Irrigation Equipment and Parts, excluding Technology | — | 253,450 | (2,144) | 251,306 | ||||
| Technology Products and Services | — | 28,515 | — | 28,515 | ||||
| Total | $ | 617,604 | $ | 281,965 | $ | (4,940) | $ | 894,629 |
| Twenty-six weeks ended June 25, 2022 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Infrastructure | Agriculture | Intersegment Sales | Consolidated | |||||
| Geographical market: | ||||||||
| North America | $ | 1,065,844 | $ | 385,743 | $ | (13,202) | $ | 1,438,385 |
| International | 379,832 | 298,602 | (467) | 677,967 | ||||
| Total | $ | 1,445,676 | $ | 684,345 | $ | (13,669) | $ | 2,116,352 |
| Product line: | ||||||||
| Transmission, Distribution and Substation | $ | 577,435 | $ | — | $ | — | $ | 577,435 |
| Lighting and Transportation | 459,419 | — | — | 459,419 | ||||
| Coatings | 172,297 | — | (7,301) | 164,996 | ||||
| Telecommunications | 139,935 | — | — | 139,935 | ||||
| Renewable Energy | 96,590 | — | — | 96,590 | ||||
| Irrigation Equipment and Parts, excluding Technology | — | 625,619 | (6,368) | 619,251 | ||||
| Technology Products and Services | — | 58,726 | — | 58,726 | ||||
| Total | $ | 1,445,676 | $ | 684,345 | $ | (13,669) | $ | 2,116,352 |
| Twenty-six weeks ended June 26, 2021 | ||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Infrastructure | Agriculture | Intersegment Sales | Consolidated | |||||
| Geographical market: | ||||||||
| North America | $ | 806,902 | $ | 278,788 | $ | (9,364) | $ | 1,076,326 |
| International | 360,348 | 232,841 | — | 593,189 | ||||
| Total | $ | 1,167,250 | $ | 511,629 | $ | (9,364) | $ | 1,669,515 |
| Product line: | ||||||||
| Transmission, Distribution and Substation | $ | 428,902 | $ | — | $ | — | $ | 428,902 |
| Lighting and Transportation | 391,763 | — | — | 391,763 | ||||
| Coatings | 155,139 | — | (5,997) | 149,142 | ||||
| Telecommunications | 99,742 | — | — | 99,742 | ||||
| Renewable Energy | 91,704 | — | — | 91,704 | ||||
| Irrigation Equipment and Parts, excluding Technology | — | 460,708 | (3,367) | 457,341 | ||||
| Technology Products and Services | — | 50,921 | — | 50,921 | ||||
| Total | $ | 1,167,250 | $ | 511,629 | $ | (9,364) | $ | 1,669,515 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
| 25-Jun-22 | 25-Dec-21 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 154,579 | $ | 177,232 |
| Accounts receivable, net | 627,876 | 571,593 | ||
| Inventories | 786,600 | 728,834 | ||
| Contract asset - costs and profits in excess of billings | 200,522 | 142,643 | ||
| Prepaid expenses and other assets | 87,070 | 83,646 | ||
| Refundable income taxes | — | 8,815 | ||
| Total current assets | 1,856,647 | 1,712,763 | ||
| Property, plant and equipment, net | 607,563 | 598,605 | ||
| Goodwill and other assets | 1,210,542 | 1,135,881 | ||
| $ | 3,674,752 | $ | 3,447,249 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Current installments of long-term debt | $ | 3,018 | $ | 4,884 |
| Notes payable to banks | 4,428 | 13,439 | ||
| Accounts payable | 388,498 | 347,841 | ||
| Accrued expenses | 237,222 | 253,330 | ||
| Contract liability - billings in excess of costs and earnings | 175,814 | 135,746 | ||
| Income taxes payable | 10,036 | — | ||
| Dividend payable | 11,743 | 10,616 | ||
| Total current liabilities | 830,759 | 765,856 | ||
| Long-term debt, excluding current installments | 995,647 | 947,072 | ||
| Operating lease liabilities | 154,799 | 147,759 | ||
| Other long-term liabilities | 140,397 | 172,965 | ||
| Shareholders' equity | 1,553,150 | 1,413,597 | ||
| $ | 3,674,752 | $ | 3,447,249 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| 26 Weeks Ended | ||||
|---|---|---|---|---|
| 25-Jun-22 | 26-Jun-21 | |||
| Cash flows from operating activities | ||||
| Net Earnings | $ | 140,113 | $ | 117,658 |
| Depreciation and amortization | 48,012 | 44,063 | ||
| Contribution to defined benefit pension plan | (17,155) | (970) | ||
| Change in working capital | (115,170) | (140,014) | ||
| Other | 12,219 | 49,448 | ||
| Net cash flows from operating activities | 68,019 | 70,185 | ||
| Cash flows from investing activities | ||||
| Purchase of property, plant, and equipment | (49,676) | (48,824) | ||
| Acquisitions | (39,297) | (312,500) | ||
| Other | 1,162 | (74) | ||
| Net cash flows from investing activities | (87,811) | (361,398) | ||
| Cash flows from financing activities | ||||
| Proceeds from long-term borrowings | 201,462 | 149,342 | ||
| Principal payments on long-term borrowings | (156,973) | (15,421) | ||
| Net (payments)/proceeds on short-term borrowings | (9,155) | (5,049) | ||
| Purchase of treasury shares | (9,776) | (21,600) | ||
| Purchase of noncontrolling interest | (4,292) | — | ||
| Dividends paid | (22,337) | (20,181) | ||
| Other | 1,641 | 2,969 | ||
| Net cash flows from financing activities | 570 | 90,060 | ||
| Effect of exchange rates on cash and cash equivalents | (3,431) | (288) | ||
| Net change in cash and cash equivalents | (22,653) | (201,441) | ||
| Cash and cash equivalents - beginning of year | 177,232 | 400,726 | ||
| Cash and cash equivalents - end of period | $ | 154,579 | $ | 199,285 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS
REGULATION G RECONCILIATION
(Dollars in thousands, except per share amounts)
(unaudited)
The non-GAAP tables below disclose the impact of intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera employees on fiscal 2022 results. We believe the adjustments for Prospera allow for a better comparison of future Agriculture segment performance as compared to historical results. The non-GAAP tables below also disclose the impact of a write off a receivable following arbitration of a commercial transaction from 2014, acquisition diligence and restructuring expenses on segment operating income and net earnings as well as the impact of the U.K. tax rate change on net earnings (adjusts GAAP tax rate from 19.0% to 22.5%) on fiscal 2021 results. Amounts may be impacted by rounding. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP measures.
| Thirteen weeks ended June 25, 2022 | Diluted | Twenty-six weeks ended June 25, 2022 | Diluted | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| earnings per | earnings per | |||||||||
| share | share | |||||||||
| Net earnings attributable to Valmont Industries, Inc. - as reported | $ | 76,108 | $ | 3.53 | $ | 138,419 | $ | 6.43 | ||
| Prospera intangible asset amortization | 1,645 | 0.08 | 3,290 | 0.15 | ||||||
| Stock-based compensation - Prospera | 2,495 | 0.12 | 4,993 | 0.23 | ||||||
| Total Adjustments, pre-tax1 | 4,140 | 0.19 | 8,283 | 0.38 | ||||||
| Tax effect of adjustments2 | (566) | (0.03) | (1,132) | (0.05) | ||||||
| Net earnings attributable to Valmont Industries, Inc. - Adjusted1 | $ | 79,682 | $ | 3.70 | $ | 145,570 | $ | 6.77 | ||
| Average shares outstanding (000’s) - Diluted | 21,541 | 21,516 | ||||||||
| Thirteen weeks ended June 26, 2021 | Diluted | Twenty-six weeks ended June 26, 2021 | Diluted | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| earnings per | earnings per | |||||||||
| share | share | |||||||||
| Net earnings attributable to Valmont Industries, Inc. - as reported | $ | 62,110 | $ | 2.89 | $ | 117,124 | $ | 5.46 | ||
| Write-off of a receivable, pre-tax | 5,545 | 0.26 | 5,545 | 0.26 | ||||||
| Acquisition diligence expense, pre-tax | 1,120 | 0.05 | 1,120 | 0.05 | ||||||
| Restructuring expense, pre-tax | 1,560 | 0.07 | 1,560 | 0.07 | ||||||
| Total Adjustments, pre-tax1 | 8,225 | 0.38 | 8,225 | 0.38 | ||||||
| Change in U.K. statutory tax rate | (2,819) | (0.13) | (2,819) | (0.13) | ||||||
| Tax effect of adjustments2 | (1,764) | (0.08) | (1,754) | (0.08) | ||||||
| Net earnings attributable to Valmont Industries, Inc. - Adjusted1 | $ | 65,752 | $ | 3.06 | $ | 120,776 | $ | 5.63 | ||
| Average shares outstanding (000’s) - Diluted | 21,469 | 21,449 |
1Earnings per share includes rounding
2The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.
| Thirteen weeks ended June 25, 2022 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating Income Reconciliation | Infrastructure | Agriculture | Corporate | Valmont | ||||||||
| Operating income - as reported | $ | 84,643 | $ | 58,046 | $ | (23,970) | $ | 118,719 | ||||
| Stock-based compensation - Prospera | — | 2,495 | — | 2,495 | ||||||||
| Prospera intangible asset amortization | — | 1,645 | — | 1,645 | ||||||||
| Adjusted Operating Income | $ | 84,643 | $ | 62,186 | $ | (23,970) | $ | 122,859 | ||||
| Net Sales - as reported | 760,750 | 374,782 | NM | 1,135,532 | ||||||||
| Operating Income as a % of Net Sales | 11.1 | % | 15.5 | % | NM | 10.5 | % | |||||
| Adjusted Operating Income as a % of Net Sales | 11.1 | % | 16.6 | % | NM | 10.8 | % | |||||
| Thirteen weeks ended June 26, 2021 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Operating Income Reconciliation | Infrastructure | Agriculture | Corporate | Valmont | ||||||||
| Operating income - as reported | $ | 61,550 | $ | 41,984 | $ | (20,909) | $ | 82,625 | ||||
| Write-off of a receivable, pre-tax | 5,545 | — | — | 5,545 | ||||||||
| Acquisition diligence expense, pre-tax | — | — | — | 1,120 | 1,120 | |||||||
| Restructuring expense, pre-tax | 650 | 910 | — | 1,560 | ||||||||
| Adjusted Operating Income | $ | 67,745 | $ | 42,894 | $ | (19,789) | $ | 90,850 | ||||
| Net Sales - as reported | 614,808 | 279,821 | NM | 894,629 | ||||||||
| Operating Income as a % of Net Sales | 10.0 | % | 15.0 | % | NM | 9.2 | % | |||||
| Adjusted Operating Income as a % of Net Sales | 11.0 | % | 15.3 | % | NM | 10.2 | % | |||||
| Twenty-six weeks ended June 25, 2022 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| Operating Income Reconciliation | Infrastructure | Agriculture | Corporate | Valmont | ||||||||
| Operating income - as reported | $ | 162,150 | $ | 95,521 | $ | (44,110) | $ | 213,561 | ||||
| Stock-based compensation - Prospera | — | 4,993 | — | 4,993 | ||||||||
| Prospera intangible asset amortization | — | 3,290 | — | 3,290 | ||||||||
| Adjusted Operating Income | $ | 162,150 | $ | 103,804 | $ | (44,110) | $ | 221,844 | ||||
| Net Sales - as reported | 1,438,375 | 677,977 | NM | 2,116,352 | ||||||||
| Operating Income as a % of Net Sales | 11.3 | % | 14.1 | % | NM | 10.1 | % | |||||
| Adjusted Operating Income as a % of Net Sales | 11.3 | % | 15.3 | % | NM | 10.5 | % | |||||
| Twenty-six weeks ended June 26, 2021 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Operating Income Reconciliation | Infrastructure | Agriculture | Corporate | Valmont | ||||||||
| Operating income - as reported | $ | 115,999 | $ | 80,732 | $ | (36,895) | $ | 159,836 | ||||
| Write-off of a receivable, pre-tax | 5,545 | — | — | 5,545 | ||||||||
| Acquisition diligence expense, pre-tax | — | — | — | 1,120 | 1,120 | |||||||
| Restructuring expense, pre-tax | 650 | 910 | — | 1,560 | ||||||||
| Adjusted Operating Income | $ | 122,194 | $ | 81,642 | $ | (35,775) | $ | 168,061 | ||||
| Net Sales - as reported | 1,161,253 | 508,262 | NM | 1,669,515 | ||||||||
| Operating Income as a % of Net Sales | 10.0 | % | 15.9 | % | NM | 9.6 | % | |||||
| Adjusted Operating Income as a % of Net Sales | 10.5 | % | 16.1 | % | NM | 10.1 | % |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
REGULATION G RECONCILIATION OF FORECASTED GAAP AND ADJUSTED EARNINGS
(Dollars in thousands, except per share amounts)
The non-GAAP tables below disclose the impact on the range of estimated diluted earnings per share of the (1) amortization of the intangible asset (Prospera) and (2) stock-based compensation for Prospera employees. We believe the adjustments for Prospera allow for a better comparison of future Agriculture segment performance as compared to historical results. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings to be taken into consideration by management and investors with the related reported GAAP measures.
| Reconciliation of Range of Net Earnings - 2022 Guidance | Low End | High End | Adjustments | |||
|---|---|---|---|---|---|---|
| Estimated net earnings - GAAP | $ | 279,000 | $ | 287,600 | ||
| Prospera intangible asset (proprietary technology) amortization, pre-tax | 6,800 | |||||
| Stock-based compensation - Prospera, pre-tax | 10,000 | |||||
| Total pre-tax adjustments | 16,800 | |||||
| Estimated tax benefit from above expenses* | (2,200) | |||||
| Total Adjustments, after-tax | $ | 14,600 | ||||
| Estimated net earnings - Adjusted | $ | 293,600 | $ | 302,200 | ||
| Diluted Earnings Per Share Range - GAAP | $ | 12.90 | $ | 13.30 | ||
| Diluted Earnings Per Share Range - Adjusted | $ | 13.60 | $ | 14.00 |
* The tax effect of adjustments is calculated based on the estimated income tax rate in each applicable jurisdiction.
vmi2q2022
© 2022 Valmont® Industries, Inc. Valmont Industries, Inc. Second Quarter 2022 Earnings Presentation July 21, 2022
Disclosure Regarding Forward-Looking Statements July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation2 These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries including the continuing and developing effects of COVID-19 including the effects of the outbreak on the general economy and the specific economic responses to the Company’s products and services, the overall market acceptance of such products and services, the integration of acquisitions and other factors disclosed in the Company’s periodic reports filed with 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, geopolitical risks and actions and policy changes of domestic and foreign governments. Consequently, such forward-looking statements should be regarded as the Company’s current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
STEVE KANIEWSKI PRESIDENT & CHIEF EXECUTIVE OFFICER July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation3
2Q 2022 Summary July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation4 • Higher volumes driven by strong broad-based market demand • Maintaining pricing strategy and discipline to capture value delivered • Seventh consecutive quarter of double digit, year-over-year sales growth • Record global backlog of $2.0 billion, reflecting strong market demand TOTAL 2Q 2022 SALES $1,135.5M; +27% Y/Y AGRICULTURE $377.8M; +34% Y/Y 33% of Sales • Strength in all regions, notably in North America, Brazil and Western Europe, on robust market demand for irrigation equipment and ag solar solutions • Growth of connected crop management and advanced analytics through higher technology sales • Geopolitical events raising food security concerns, leading to higher demand for irrigation, solar and technology solutions INFRASTRUCTURE $765.0M; +24% Y/Y 67% of Sales • Strong underlying demand across global markets, along with favorable pricing and higher volumes • Ongoing electrification of power infrastructure continues to lead grid investments; expect benefit from renewable energy funding and the U.S. infrastructure bill • More than 45% sales growth in the Telecommunications product line
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation5 Adds Fast Growing Company in 5G Infrastructure and PIM Mitigation Solutions to Portfolio Strategic Rationale • The acquisition advances Valmont’s strategy to provide concealment, PIM and radio frequency solutions in the telecommunication sector • Leverages our engineering expertise and global manufacturing footprint to enhance our access to markets and carriers around the world • Accelerates expansion in telecom markets in partnership with industry-leader Ericsson, who remains a minority owner ConcealFab Overview • ConcealFab is a leader in the 5G infrastructure and passive intermodulation (PIM) mitigation solutions for telecommunications • Early innovator in 5G and small cell infrastructure • First-to-market innovative solutions, customer-centric strategy, and established partnerships with wireless operators, utilities, and major OEMs ConcealFab Acquisition Expands Presence in Global Telecom Market
Conserving Resources, Improving Life® July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation6 Demonstrating ESG is Good For Business Committed to 2025 environmental goals and four aligned United Nations Sustainability Development Goals Sustainable Manufacturing Expansion New spun concrete manufacturing facility in Bristol, Indiana to create highly engineered low carbon transmission poles, with planned installation of a 500kW solar array • Creates northern U.S. concrete utility market presence • Builds grid resiliency and will support growing demand for transmission poles • Solar field is expected to fully offset the site’s electricity consumption • Net metering agreement allows for generated energy to be sold back at retail price Better Projects Award Recipient Awarded the annual Better Projects Award for the Alternative Energy-Mobile Source project • Replaced 100 gasoline vehicles with electrical vehicles at the Valley, NE campus • Reduced Valley’s Scope I GHG emissions by ~130 metric tons annually with an associated annual fuel cost savings • Model project for creation of future sustainability program called the “Green Fleet Initiative” Bristol, Indiana
AVNER APPLBAUM EVP & CHIEF FINANCIAL OFFICER July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation7
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation8 Diluted EPS GAAP Adjusted1 +22.1% +20.9% Sales ($M) +26.9% Operating Income ($M) GAAP Adjusted1 +43.7% +35.2% 2Q 2022 Financial Summary • Higher volumes and a relentless focus on pricing strategies, improved fixed-cost leverage and the realization of strong demand across the portfolio • Operating income margin improved to 10.5% (10.8% adjusted1) of net sales • EPS growth driven by higher operating income, partially offset by higher tax expense due to changes in the geographic mix of earnings and an incremental UK tax benefit in 2021 that did not repeat this year 1 Please see Reg G reconciliation to GAAP measures at end of document. $82.6 $118.7 $90.9 $122.9 2021 2022 2021 2022 $894.6 $1,135.5 2021 2022 $2.89 $3.53 $3.06 $3.70 2021 2022 2021 2022
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation9 Sales ($M) 23.9% 2Q 2022 Results | Infrastructure • Sales growth was driven by favorable pricing, primarily in the TD&S, L&T and Telecommunications product lines, and higher volumes, primarily in TD&S and Renewable Energy product lines • Operating income margin improved to 11.1% of net sales, due to favorable pricing and improved fixed-cost leverage, including SG&A Sales ($M) 2021 2022 % Transmission, Distribution and Substation (TD&S) $ 220.5 $ 295.8 +34% Lighting and Transportation (L&T) 215.2 246.7 +15% Coatings 80.3 90.3 +12% Telecommunications 54.1 78.5 +45% Renewable Energy 47.5 53.6 +13% $617.6 $765.0 2021 2022 Operating Income ($M) GAAP Adjusted1 37.5% 24.9% $61.6 $84.6 $67.7 $84.6 2021 2022 2021 2022
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation10 Operating Income ($M) GAAP Adjusted1 38.3% 45.0% Sales ($M) 34.0% 2Q 2022 Results | Agriculture 1 Please see Reg G reconciliation to GAAP measures at end of document. 2Agricultural Technology sales are reported as a subset of total Agriculture segment sales $282.0 $377.8 2021 2022 • Sales increased due to higher average selling prices of irrigation equipment globally, and higher volumes specifically in North America and Brazil • In Brazil, revenues nearly doubled growing more than $40.0 million year-over-year demonstrating robust market demand for irrigation equipment and ag solar products • Operating income margin improved to 15.5% of net sales (16.6% adjusted1) due to favorable pricing and additional volume leverage, partially offset by higher SG&A expense, including incremental R&D expense for technology investments Sales ($M) 2021 2022 % North American Irrigation $ 156.0 $ 203.5 +30% International Irrigation 125.9 174.3 +38% Agricultural Technology2 28.5 30.2 +6% $42.0 $58.0 $42.9 $62.2 2021 2022 2021 2022
July 21, 202211 2Q 2022 Cash Flow Highlights ($M) YTD 6/25/2022 Net Cash Flows from Operating Activities $ 68.0 Net Cash Flows from Investing Activities (87.8) Net Cash Flows from Financing Activities 0.6 Net Cash Flows from Operating Activities $ 68.0 Purchase of Property, Plant & Equipment (49.7) Free Cash Flows $ 18.3 Full-Year Operating Cash Flows Expected To Exceed Net Earnings in 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation12 Balanced Approach to Capital Allocation GROWING OUR BUSINESS RETURNING CASH TO SHAREHOLDERS $50M $39M $10M $22M Capital Expenditures Acquisitions Share Repurchases Dividends • In line with expected 2022 FY CapEx of $110 - $120M • Investments to support strategic growth initiatives and Industry 4.0 advanced manufacturing • Acquired ConcealFab to expand 5G infrastructure presence; will be accretive in year one • Strategic fit + market expansion • Returns exceeding cost of capital within 3 years • Opportunistic approach, supported by free cash flow • ~$112M remains on current authorization • 10% dividend increase announced February 2022 • Payout ratio target: 22% of earnings • Current payout: ~15% 2022 YTD Capital Deployment: $122M
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation13 Strong Balance Sheet and Liquidity Cash $154.6M Total Long-Term Debt $995.6M Shareholders’ Equity $1,553.2M Total Debt to Adj. EBITDA1 1.8x Available Credit under Revolving Credit Facility2 $534.4M Cash $154.6M Total Available Liquidity $689.0M As of June 25, 2022 ► Long-term debt of $995.6M, mostly fixed-rate, with long-dated maturities to 2044 and 2054 ► Total Debt to Adjusted EBITDA remains within our desired range of 1.5 to 2.5 times ► Capital allocation strategy has not changed, and the primary focus is to maintain liquidity to support operations 1See slide 31 for calculation of Adjusted EBITDA and Leverage Ratio. 2 $800M Total Revolver less borrowings and Standby LC’s of $266M.
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation14 Full Year 2022 Outlook and Key Assumptions KEY ASSUMPTIONS • Significant momentum supported by the long-term, global market drivers across our businesses • Revised net sales growth is primarily the result of favorable pricing to offset continued broad-based inflation • Expect full-year mid-single digit volume growth • Now expecting an unfavorable foreign currency translation impact of ~2.0% of net sales vs prior year • Now expecting a full year tax rate of ~27.5% due to the expected geographic mix of earnings • CapEx continues to be $110M-$120M to support strategic growth initiatives and Industry 4.0 advanced manufacturing initiatives PREVIOUS 2022 OUTLOOK1 CURRENT 2022 OUTLOOK1 1 Exclusive of potential future restructuring activities. 2 Please see Reg G reconciliation to GAAP measures at end of document. 11% – 17% Increase in Net Sales YoY 0.0% FX Translation Impact on Net Sales $13.00 – $13.50 Adj. Diluted EPS2 $12.30 – $12.80 GAAP Diluted EPS ~26.5% Tax Rate $3.9B – $4.1B Net Sales 20% – 21% Increase in Net Sales YoY ~ (2.0%) FX Translation Impact on Net Sales $13.60 – $14.00 Adj. Diluted EPS2 $12.90 – $13.30 GAAP Diluted EPS ~27.5% Tax Rate ~ $4.2B Net Sales
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation15 Fundamental Market Drivers Remain Resilient Record Backlog of More than $2.0B at the End of 2Q 2022 INFRASTRUCTURE • Long term need for critical infrastructure investment globally, supported by current and future stimulus • Ongoing demand and necessity for renewables, grid hardening and resiliency and expanding ESG focus within utility markets • Ongoing investment in sustainable transportation infrastructure, including lighting systems and long-lasting bridge systems • Increased number of economies actively fighting costs of corrosion will drive need to extend life of steel products globally over long term • Rapid acceleration of 5G network deployment and carriers’ investments support macro buildouts in suburban and rural communities • Increasing demand for integrated smart technology solutions AGRICULTURE • Favorable market conditions, including elevated grain commodity prices and farmer sentiment are leading to increasing demand for irrigation equipment and technology solutions globally • Food security with a growing population and continued geo-political concerns are driving international governments’ investment in agriculture • Growth in technology adoption led by growers' increasing demand for connected crop management and advanced analytics to reduce input costs, increase land productivity and minimize farm labor costs • Helping customers meet their own ESG initiatives through ag solar solutions
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation16 Summary Ability to grow sales through innovation and execution while adapting and responding quickly to meet customer needs Financial strength and flexibility by executing on our pricing strategies and advancing operational excellence across our footprint Our diversified markets are supported by strong drivers that are independent of the general economy Investing in our employees and technology to drive new products and services, and build upon the strength of our operations Poised and Well Positioned to Capture Growth and Drive Stakeholder Value in the Future Disciplined capital allocation allocating capital to high-growth strategic investments while returning capital to shareholders through dividends and share repurchases
17 Q&A July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation
18 APPENDIX July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation19 2Q 2022 Financial Summary $M, except for per share amounts .1Includes rounding 2Please see Reg G reconciliation to GAAP measures at end of document.. Net Sales 2022 2021 Change YTD 2022 YTD 2021 Change Infrastructure $ 765.0 $ 617.6 23.9% $ 1,445.7 $ 1,167.3 23.8% Agriculture 377.8 282.0 34.0% 684.3 511.6 33.8% Intersegment Sales1 (7.3) (5.0) NM (13.6) (9.4) NM Net Sales $ 1,135.5 $ 894.6 26.9% $ 2,116.4 $ 1,669.5 26.8% Operating Income $ 118.7 $ 82.6 43.7% $ 213.6 $ 159.8 33.6% Adjusted Operating Income2 $ 122.9 $ 90.9 35.2% $ 221.8 $ 168.1 32.0% Net Income $ 76.1 $ 62.1 22.5% $ 138.4 $ 117.1 18.2% Adjusted Net Income $ 79.7 $ 65.8 21.2% $ 145.6 $ 120.8 20.5% Diluted Earnings Per Share (EPS) $ 3.53 $ 2.89 22.1% $ 6.43 $ 5.46 17.8% Adjusted Diluted Earnings Per Share (EPS)2 $ 3.70 $ 3.06 20.9% $ 6.77 $ 5.63 20.2%
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation20 Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation21 Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation22 Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation23 Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation24 Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings (Dollars in thousands, except per share amounts)
Historical Segment Financials July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation25 2020 Q1 Q2 Q3 Q4 FY FY Sales: Infrastructure segment 549,646$ 617,604$ 634,283$ 693,568$ 2,495,101$ 2,261,804$ Agriculture segment 229,664 281,965 240,331 276,757 1,028,717 645,831 Total 779,310 899,569 874,614 970,325 3,523,818 2,907,635 Intersegment Sales: Infrastructure segment (3,201) (2,796) (1,826) (2,753) (10,576) (6,541) Agriculture segment (1,223) (2,144) (4,006) (4,294) (11,667) (5,739) Total (4,424) (4,940) (5,832) (7,047) (22,243) (12,280) Net Sales: Infrastructure segment 546,445 614,808 632,457 690,815 2,484,525 2,255,263 Agriculture segment 228,441 279,821 236,325 272,463 1,017,050 640,092 Total 774,886$ 894,629$ 868,782$ 963,278$ 3,501,575$ 2,895,355$ Operating Income: Infrastructure segment 54,449 61,550 71,422 45,985 233,406 209,172 Agriculture segment 38,748 41,984 27,735 28,560 137,027 83,046 Corporate (15,986) (20,909) (22,962) (23,791) (83,648) (66,265) Total 77,211$ 82,625$ 76,195$ 50,754$ 286,785$ 225,953$ 2021
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation26 Infrastructure Investment and Jobs Act (IIJA) Source:(7/15/2022): Grassley.senate.gov Infrastructure Investment and Jobs Act Spending Breakdown (In Order - Most to Least) Previously-Passed Transportation Funding | $650B Roads, Bridges and Related Programs | $111B Energy, Power and Electric Grid Reliability | $107.5B Freight and Passenger Rail | $66B Broadband | $65B Water and Wastewater Infrastructure | $55B Public Transportation | $39.2B Airports | $25B Natural Disaster Prevention and Mitigation | $23.3B Cleaning-Up Abandoned Sites | $21B Army Corps of Engineers | $16.7B Highway and Pedestrian Safety | $11B Ports and Coast Guard | $7.8B Cybersecurity and other Infrastructure Programs | $10.11B
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation27 5G Adoption and Capex Spend Forecasts Source: GSM Association.
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation28 U.S. Net Cash Farm Income by Year Source: USDA, American Farm Bureau Federation
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation29 2012-2021 Historical Free Cash Flow1 1 Adjusted earnings for purposes of calculating FCF conversion may not agree to the adjusted net earnings. The difference is due to cash restructuring, debt refinancing, or other non-recurring expenses which were settled in cash in the year of occurrence. ($M) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Net cash flows from operating activities $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 Net cash flows from investing activities (136.7) (131.7) (256.9) (48.2) (53.0) (49.6) (155.4) (168.1) (104.0) (417.3) Net cash flows from financing activities (16.4) (37.4) (136.8) (32.0) (95.2) (32.0) (162.1) (98.9) (173.8) 133.5 Net cash flows from operating activities $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 Purchase of plant, property, and equipment (97.1) (106.8) (73.0) (45.5) (57.9) (55.3) (72.0) (97.4) (106.7) (107.8) Free Cash flows 100.0 289.7 101.1 226.8 174.9 77.8 81.0 210.2 209.6 (41.9) Net earnings attributed to Valmont Industries, Inc. $ 234.1 $ 278.5 $ 183.9 $ 40.1 $ 175.5 $ 120.5 $ 101.8 $ 146.4 $ 140.7 $ 195.6 Adjusted net earnings attributed to Valmont Industries, Inc. N/A $ 295.1 $ 187.7 $ 131.7 $ 139.9 $ 162.7 $ 130.4 N/A $ 159.8 $ 222.3 Free Cash Flow Conversion - GAAP 0.43 1.04 0.55 5.66 1.00 0.65 0.80 1.44 1.49 (0.21) Free Cash Flow Conversion - Adjusted N/A 0.98 0.53 1.71 1.25 0.48 0.62 N/A 1.31 (0.19) 1) Reconciliation of Net Earnings to Adjusted Figures Net earnings attributed to Valmont Industries, Inc. $ 234.1 $ 278.5 $ 183.9 $ 40.1 $ 175.5 $ 120.5 $ 101.8 $ 146.4 $ 140.7 $ 195.6 Change in valuation allowance against deferred tax assets - - - 7.1 (20.7) 41.9 - - - 5.0 Impairment of long-lived assets - 12.2 - 61.8 1.1 - 28.6 - 19.1 21.7 Reversal of contingent liability - - - (16.6) - - - - - Other non-recurring expenses (non-cash) - - - 18.1 - - - - Deconsolidation of Delta EMD, after-tax and NCI - 4.4 - - - - - - - - Noncash loss from Delta EMD shares - - 3.8 4.6 0.6 0.2 - - - - Adjusted net earnings attributed to Valmont Industries, Inc. $ 234.1 $ 295.1 $ 187.7 $ 131.7 $ 139.9 $ 162.7 $ 130.4 $ 146.4 $ 159.8 $ 222.3 10 Year Average FCF is $143M; Last 5 Years Has Averaged $107M
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation30 Years of rapid raw material cost inflation GAAP 0.43X 1.04X 0.55X 5.66X 1.01X 0.67X 0.86X 1.37X 1.49X (0.21X) Adj. N/A 0.98X 0.53X 1.71X 1.27X 0.49X 0.66X N/A 1.28X (0.19X) 2012 – 2021 Free Cash Flow1 ($M) 100 290 101 227 175 78 81 210 210 (42) 143 (100) (50) - 50 100 150 200 250 300 350 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 10 Year Avg 10-yr Avg. $143M GAAP 1.28X Adj. 0.84X Historical FCF Conversion by Year1 Strong Free Cash Flow throughout the Cycle 1 We use the non-GAAP measure of FCF, which we define as GAAP net cash flows from operating activities reduced by capex. We believe that FCF is a useful performance measure for management and useful to investors as the basis for comparing our performance with other companies. Our measure of FCF may not be directly comparable to similar measures used by other companies.
July 21, 2022 | Valmont Industries, Inc. | Q2 2022 Earnings Presentation31 Calculation of Adjusted EBITDA and Leverage Ratio Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior four quarters. See “Leverage Ratio “ below. TTM 25-Jun-22 Net earnings attributable to Valmont Industries, Inc. $ 216,925 Interest expense 44,826 Income tax expense 83,880 Stock-based compensation 39,355 Depreciation and amortization expense 96,527 EBITDA 481,513 Asset impairments 27,911 Adjusted EBITDA – last four quarters $ 509,424 Net indebtedness $ 1,003,093 Leverage Ratio 1.76 Interest-bearing debt $ 1,003,093 Less: Cash and cash equivalents in excess of $50 million 104,579 Net indebtedness $ 898,514 ($000s)