VMI 8-K
Valmont Industries Inc (VMI)
8-K
2021-10-21
For: 2021-10-20
View Original
Added on
April 04, 2026
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
Date of Report (date of earliest event reported)
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | ||||||||||||||
(Commission File Number) | (I.R.S. Employer Identification No.) | |||||||||||||
(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):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
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 October 20, 2021 announcing its financial results for its fiscal year ended September 25, 2021. The press release, along with the presentation to be used during its earnings call on October 21, 2021, 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 | |||||||
| Press Release dated October 20, 2021 | ||||||||
| Presentation Slides for earnings call on October 21, 2021 | ||||||||
| 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: October 20, 2021 | ||||||||
| By: | /s/ AVNER M. APPLBAUM | |||||||
| Name: Avner M. Applbaum | ||||||||
| Title: Executive Vice President and Chief Financial Officer | ||||||||
| FOR IMMEDIATE RELEASE | ||||||||
| Contact: | Renee Campbell | |||||||
| Phone: | +1 402.963.1057 | |||||||
| Date: | October 20, 2021 | |||||||
Valmont Reports Third Quarter 2021 Results
Omaha, NE - Valmont Industries, Inc. (NYSE: VMI), a leading global provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, today reported financial results for the third quarter ended September 25, 2021.
Third Quarter 2021 Highlights (all metrics compared to Third Quarter 2020 unless otherwise noted)
•Record Third-Quarter Net Sales of $868.8 million, an increase of 18.4%, with growth in all segments led by significantly higher Irrigation sales
•Operating Income improved to $76.2 million, or 8.8% of sales ($80.4 million or 9.3% adjusted1) compared to $61.5 million or 8.4% of sales last year ($67.1 million or 9.1% adjusted1), despite ongoing inflationary pressures and supply chain disruptions
•Diluted Earnings per Share (EPS) improved to $2.40 ($2.57 adjusted1) compared to $1.84 ($1.99 adjusted1)
•Record global backlog of more than $1.5 billion, an increase of 35.0% since the end of fiscal 2020, reflecting improved pricing and continued strong market demand
•Raising the bottom end of full-year GAAP diluted EPS guidance to a new range of $10.10 to $10.60 (Adjusted diluted EPS to $10.60 to $11.10)1.
1 Please see Reg G reconciliation to GAAP measures at end of document
Key Financial Metrics
| Third Quarter | GAAP | Adjusted1 | |||||||||||||||||||||||||||
| (000's except per share amounts) | 09/25/2021 3Q 2021 | 09/26/2020 3Q 2020 | vs. 3Q 2020 | 09/25/2021 3Q 2021 | 09/26/2020 3Q 2020 | vs. 3Q 2020 | |||||||||||||||||||||||
Net Sales | $ | 868,782 | $ | 733,970 | 18.4% | $ | 868,782 | $ | 733,970 | 18.4% | |||||||||||||||||||
Operating Income | 76,195 | 61,479 | 23.9% | 80,433 | 67,111 | 19.9% | |||||||||||||||||||||||
Operating Income as a % of Net Sales | 8.8 | % | 8.4 | % | 9.3 | % | 9.1 | % | |||||||||||||||||||||
Net Earnings | 51,650 | 39,342 | 31.3% | 55,284 | 42,670 | 29.6% | |||||||||||||||||||||||
Diluted Earnings Per Share | $ | 2.40 | $ | 1.84 | 30.4% | $ | 2.57 | $ | 1.99 | 29.1% | |||||||||||||||||||
Average Shares Outstanding | 21,552 | 21,416 | 21,552 | 21,416 | |||||||||||||||||||||||||
| Year-To-Date | GAAP | Adjusted1 | |||||||||||||||||||||||||||
| 09/25/2021 YTD 2021 | 09/26/2020 YTD 2020 | vs. YTD 2020 | 09/25/2021 YTD 2021 | 09/26/2020 YTD 2020 | vs. YTD 2020 | ||||||||||||||||||||||||
Net Sales | $ | 2,538,297 | $ | 2,096,978 | 21.0% | $ | 2,538,297 | $ | 2,096,978 | 21.0% | |||||||||||||||||||
Operating Income | 236,031 | 171,814 | 37.4% | 248,494 | 199,663 | 24.5% | |||||||||||||||||||||||
Operating Income as a % of Net Sales | 9.3 | % | 8.2 | % | 9.8 | % | 9.5 | % | |||||||||||||||||||||
Net Earnings | 168,774 | 104,878 | 60.9% | 176,060 | 128,446 | 37.1% | |||||||||||||||||||||||
Diluted Earnings Per Share | $ | 7.86 | $ | 4.89 | 60.7% | $ | 8.20 | $ | 5.99 | 36.9% | |||||||||||||||||||
Average Shares Outstanding | 21,483 | 21,453 | 21,483 | 21,453 | |||||||||||||||||||||||||
"We have continued building positive momentum in 2021 with another quarter of strong sales and operating performance," said Stephen G. Kaniewski, President and Chief Executive Officer. "Our results reflect the benefits of focused pricing actions and our growth strategies, combined with the strength of our businesses and execution by our global teams. Through these actions, we achieved record third-quarter sales, grew adjusted operating income 20 percent year-over-year and delivered adjusted diluted earnings per share growth of 30 percent, despite ongoing inflationary pressures of higher raw materials, freight and labor. Sales growth this quarter was once again led by significantly higher sales in Irrigation, as strong global agricultural market fundamentals are driving positive farmer sentiment, and deliveries of the large Egypt project continued. Robust market demand for improving grid resiliency and renewable energy usage, and increased pricing are driving continued sales growth in Utility Support Structures. Higher sales in Engineered Support Structures were led by a focus on pricing and growth of wireless communication products and components, and solid execution globally helped drive this segment's third-quarter operating profit margins above 12 percent for the first time. Sales growth in Coatings was led by pricing and improved industrial production levels compared to last year."
Kaniewski continued, "Year-to-date, we have delivered strong results driven by the engagement and focus of our employees and successful execution of our strategies, in spite of a challenging macro environment. I am incredibly proud of the way our team continues to perform and would like to thank our employees for their hard work in delivering these results and continuing to provide exceptional service to our customers."
Third Quarter 2021 Segment Review
Infrastructure
Utility Support Structures Segment (31.8% of Sales)
Steel, concrete and composite structures for utility markets, including transmission, distribution, substations, renewable energy generation equipment and drone inspection services
1 Please see Reg G reconciliation to GAAP measures at end of document
Sales of $276.5 million grew slightly year-over-year. Significantly higher pricing and higher volumes in North American markets due to utilities' ongoing investments in grid resiliency were mostly offset by lower global generation sales primarily related to large projects in 2020 that did not repeat this year.
Operating Income was $24.6 million or 8.9% of sales compared to $25.9 million or 9.4% of sales ($29.2 million or 10.6% adjusted1) in 2020. Higher average selling prices were more than offset by the impact of continued raw material cost inflation that was not fully recovered through pricing mechanisms during the quarter, and lower global generation product sales.
Engineered Support Structures Segment (32.4% of Sales)
Poles, towers and components for the lighting, transportation and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products
Sales of $281.1 million increased 10.0% year-over-year, due to favorable pricing in all regions and higher sales of wireless communication products and components.
Lighting and transportation sales of $188.6 million increased 3.9% year-over-year, as favorable pricing and higher commercial lighting sales more than offset lower transportation volumes in most regions.
Wireless communication products and components sales of $63.4 million increased 25.2% year-over-year. Capital investments from wireless carriers supporting 5G buildouts, and favorable pricing led to sales growth.
Access systems sales of $29.1 million increased 24.3% year-over-year, primarily due to improved end markets in Australia.
Operating Income improved to $34.4 million or 12.2% of sales compared to $25.4 million or 9.9% of sales ($26.4 million or 10.3% adjusted1) in 2020. Profitability improvement was driven by favorable pricing and improved fixed cost leverage.
Coatings Segment (11.1% of Sales)
Galvanizing, painting and anodizing services to preserve and protect metal products
Sales of $96.7 million increased 10.0% year-over-year, due to higher average selling prices and sales from the new greenfield facility in Pittsburgh, PA that commenced operations earlier this year.
Operating Income was $12.5 million or 12.9% of sales compared to $12.4 million or 14.1% of sales ($13.7 million or 15.6% adjusted1) in 2020. Lower profitability was driven by higher cost inflation that was not yet fully recovered by price, and startup costs related to the new Pittsburgh facility.
Agriculture
Irrigation Segment (27.7% of Sales)
Center pivots and linear irrigation equipment for agricultural markets, including parts, services, and tubular products, and advanced technology solutions for water management and precision agriculture
Global sales of $240.3 million increased 72.6% year-over-year, due to higher volumes in all markets, particularly Egypt, North America and Brazil, favorable pricing, and higher technology sales.
North American sales of $116.3 million grew 53.4% compared to 2020. Sales growth was led by favorable pricing, higher volumes due to continued strength in agricultural markets and higher industrial tubing sales.
International sales of $124.0 million nearly doubled year-over-year. Sales growth was led by continued strong demand, including deliveries of the large Egypt project and higher sales in Brazil, Africa and Europe.
1 Please see Reg G reconciliation to GAAP measures at end of document
Global backlog increased 26.0% year-over-year to $388.0 million, demonstrating the underlying strength in agricultural markets globally.
Operating Income improved to $27.7 million, or 11.5% of sales ($32.0 million or 13.3% adjusted1) compared to $14.7 million, or 10.6% of sales in 2020. Profitability growth was driven by higher volumes, favorable pricing and improved operational efficiencies, partially offset by SG&A expense from the recent Prospera acquisition.
Global Supply Chain and Continuation of COVID-19 Safety Protocols
Since the start of the pandemic, the Company has been taking measured and deliberate steps to strengthen its global supply chain. Through its strong relationships with many strategic suppliers, Valmont has experienced no significant supply disruptions, and has been able to continue procuring raw materials and components critical to its operations, including steel, aluminum and zinc. Other supply constraints have been largely mitigated by effectively utilizing the Company's global footprint.
Valmont monitors health advisories on a continuous basis and will continue to follow CDC, WHO and local guidelines to protect the safety, health and well-being of employees, customers, suppliers and communities.
Balance Sheet, Liquidity and Capital Allocation
Year-to-date cash flows from operations are $61.8 million, primarily reflecting higher levels of net working capital to proactively manage supply chain disruptions and support strong sales growth. At the end of third quarter, cash and cash equivalents were $170.0 million. Valmont purchased $2.5 million of company stock in the third quarter, and $123.9 million remains on the current authorization with no expiration. The Company remains committed to maintaining its Investment Grade credit rating.
2021 Financial Outlook and Key Assumptions
The Company is raising the bottom end of its full-year diluted EPS guidance range and reaffirming key assumptions for the remainder of 2021. GAAP diluted EPS is now expected to be $10.10 to $10.60 and adjusted diluted EPS is now expected to be $10.60 to $11.101. Full-year Net Sales growth is expected to be 17% to 18%, and Irrigation segment sales growth is expected to be 50% to 53%. The revised guidance reflects the Company's year-to-date results, strength in global agricultural markets, continued favorable end-market demand across all businesses and expected recovery of cost inflation.
| 2021 Full Year Financial Outlook | Previous Outlook | Revised Outlook | ||||||
Net Sales Growth (vs. PY) | 16% to 19% | 17% to 18% | ||||||
Irrigation Segment Sales Growth (vs. PY) | 45% to 50% | 50% to 53% | ||||||
GAAP Diluted EPS1 | $9.90 to $10.60 | $10.10 to $10.60 | ||||||
Adjusted Diluted EPS1 | $10.40 to $11.10 | $10.60 to $11.10 | ||||||
2021 Key Assumptions
•Favorable foreign currency translation impact of approximately 1.0% of Net Sales
•Fourth quarter tax rate of approximately 24.0%;
•Capital expenditures to be in the range of $110 - $120 million to support strategic growth and Industry 4.0 advanced manufacturing initiatives
•No pandemic-driven closures of large manufacturing facilities, workforce disruptions, or significant supply chain interruptions
"The strong market drivers we are seeing across our businesses, and our team’s proven ability to manage through this unprecedented macro environment give us confidence about the remainder of this year", Kaniewski added. "We entered the fourth quarter with a record backlog of more than $1.5 billion reflecting
1 Please see Reg G reconciliation to GAAP measures at end of document
strong market demand. In the Utility Support Structures segment, despite continued steel cost increases, we expect sequential margin improvement as pricing becomes more aligned with inflation. Our backlog of more than $760.0 million in this segment is indicative of the long-term market drivers of grid resiliency and the increasing use of renewable energy. In Engineered Support Structures, the long-term need for critical infrastructure investment globally, including current and future stimulus programs, gives us confidence in future growth. We are benefiting from increasing demand in wireless communications markets as 5G build-outs are accelerating. Our Coatings business has been trending in-line with industrial production levels. In Irrigation, a solid international project pipeline and favorable market trends globally are providing strong momentum well into next year. Across the portfolio, we continue to quickly execute pricing strategies to recover the impact of inflation and leverage the strength of our global supply chain. Additionally, our balance sheet remains strong, giving us flexibility to execute our long-term strategic plan."
Kaniewski continued, "Strong market demand, the strength of our operations, and our continued pricing actions across the portfolio give us confidence as we look ahead to next year. In 2022 we expect sales growth of 7% to 12% and earnings per share growth of 13% to 15%, in line with the 3- to-5 year growth targets we communicated at our May 2021 Investor Day. We are in a position of strength with a diverse and talented team who are driven by our core values to deliver results for our customers and our stakeholders.”
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, October 21, 2021 at 8:00 a.m. CDT by dialing 1-877-407-6184 or 1-201-389-0877 (no Conference ID needed), or via webcast by pointing browsers to this link: Valmont Industries 3Q 2021 Earnings Conference Call. A slide presentation will simultaneously be available for download on the Investors page at valmont.com. A replay of the event can be accessed two hours after the call at the above link or by telephone at 1-877-660-6853 or 1-201-612-7415. Please use conference identification number 13713723. The replay will be available through 10:59 p.m. CDT on October 28, 2021.
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, 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)
| Third Quarter | Year-to-Date | ||||||||||||||||||||||
| 13 Weeks Ended | 39 Weeks Ended | ||||||||||||||||||||||
| 25-Sep-21 | 26-Sep-20 | 25-Sep-21 | 26-Sep-20 | ||||||||||||||||||||
| Net sales | $ | 868,782 | $ | 733,970 | $ | 2,538,297 | $ | 2,096,978 | |||||||||||||||
| Cost of sales | 641,378 | 543,223 | 1,876,692 | 1,536,045 | |||||||||||||||||||
Gross profit | 227,404 | 190,747 | 661,605 | 560,933 | |||||||||||||||||||
Selling, general and administrative expenses | 151,209 | 129,268 | 425,574 | 372,481 | |||||||||||||||||||
| Impairment of goodwill and intangible assets | — | — | — | 16,638 | |||||||||||||||||||
| Operating income | 76,195 | 61,479 | 236,031 | 171,814 | |||||||||||||||||||
| Other income (expense) | |||||||||||||||||||||||
| Interest expense | (11,031) | (10,454) | (31,466) | (30,566) | |||||||||||||||||||
| Interest income | 397 | 430 | 894 | 1,931 | |||||||||||||||||||
| Gain on investments (unrealized) | 488 | 900 | 1,556 | 1,102 | |||||||||||||||||||
| Other | 2,644 | 233 | 10,297 | 1,349 | |||||||||||||||||||
| Other income (expense), net | (7,502) | (8,891) | (18,719) | (26,184) | |||||||||||||||||||
| Earnings before income taxes | 68,693 | 52,588 | 217,312 | 145,630 | |||||||||||||||||||
| Income tax expense | 16,080 | 12,084 | 46,322 | 39,172 | |||||||||||||||||||
| Equity in (loss) of nonconsolidated subsidiaries | (360) | (276) | (1,079) | (755) | |||||||||||||||||||
| Net earnings | 52,253 | 40,228 | 169,911 | 105,703 | |||||||||||||||||||
| Less: Loss (earnings) attributable to non-controlling interests | (603) | (886) | (1,137) | (825) | |||||||||||||||||||
| Net earnings attributable to Valmont Industries, Inc. | $ | 51,650 | $ | 39,342 | $ | 168,774 | $ | 104,878 | |||||||||||||||
| Average shares outstanding (000's) - Basic | 21,175 | 21,309 | 21,182 | 21,358 | |||||||||||||||||||
| Earnings per share - Basic | $ | 2.44 | $ | 1.85 | $ | 7.97 | $ | 4.91 | |||||||||||||||
| Average shares outstanding (000's) - Diluted | 21,552 | 21,416 | 21,483 | 21,453 | |||||||||||||||||||
| Earnings per share - Diluted | $ | 2.40 | $ | 1.84 | $ | 7.86 | $ | 4.89 | |||||||||||||||
| Cash dividends per share | $ | 0.500 | $ | 0.450 | $ | 1.500 | $ | 1.350 | |||||||||||||||
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(unaudited)
| Third Quarter | Year-to-Date | ||||||||||||||||||||||
| 13 Weeks Ended | 39 Weeks Ended | ||||||||||||||||||||||
| 25-Sep-21 | 26-Sep-20 | 25-Sep-21 | 26-Sep-20 | ||||||||||||||||||||
| Net sales | |||||||||||||||||||||||
Utility Support Structures | $ | 276,502 | $ | 274,393 | $ | 797,498 | $ | 731,178 | |||||||||||||||
| Engineered Support Structures | 281,097 | 255,656 | 772,813 | 739,783 | |||||||||||||||||||
Coatings | 96,685 | 87,886 | 288,131 | 255,976 | |||||||||||||||||||
| Infrastructure products | 654,284 | 617,935 | 1,858,442 | 1,726,937 | |||||||||||||||||||
| Irrigation | 240,331 | 139,209 | 751,960 | 446,568 | |||||||||||||||||||
| Less: Intersegment sales | (25,833) | (23,174) | (72,105) | (76,527) | |||||||||||||||||||
| Total | $ | 868,782 | $ | 733,970 | $ | 2,538,297 | $ | 2,096,978 | |||||||||||||||
| Operating Income | |||||||||||||||||||||||
Utility Support Structures | $ | 24,561 | $ | 25,881 | $ | 61,168 | $ | 75,255 | |||||||||||||||
| Engineered Support Structures | 34,383 | 25,434 | 86,235 | 46,183 | |||||||||||||||||||
Coatings | 12,478 | 12,416 | 40,018 | 33,618 | |||||||||||||||||||
| Infrastructure products | 71,422 | 63,731 | 187,421 | 155,056 | |||||||||||||||||||
| Irrigation | 27,735 | 14,687 | 108,467 | 60,701 | |||||||||||||||||||
| Corporate | (22,962) | (16,939) | (59,857) | (43,943) | |||||||||||||||||||
| Total | $ | 76,195 | $ | 61,479 | $ | 236,031 | $ | 171,814 | |||||||||||||||
Valmont has aggregated its business segments into four global reportable segments as follows.
Utility Support Structures: This segment consists of the manufacture of steel, concrete and composite structures for utility markets, including transmission, distribution, substations, renewable energy generation equipment and drone inspection services.
Engineered Support Structures: This segment consists of the manufacture and distribution of poles, towers and components for the lighting, transportation and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products.
Coatings: This segment consists of global galvanizing, painting and anodizing services to preserve and protect metal products.
Irrigation: This segment consists of the global manufacture of center pivots and linear irrigation equipment for agricultural markets, including, parts, services, and tubular products, and advanced technology solutions for water management and precision agriculture
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
| 25-Sep-21 | 26-Dec-20 | ||||||||||
| ASSETS | |||||||||||
| Current assets: | |||||||||||
Cash and cash equivalents | $ | 169,795 | $ | 400,726 | |||||||
| Accounts receivable, net | 537,693 | 511,714 | |||||||||
| Inventories | 655,903 | 448,941 | |||||||||
| Contract asset - costs and profits in excess of billings | 155,417 | 123,495 | |||||||||
| Prepaid expenses and other assets | 95,965 | 59,804 | |||||||||
| Refundable income taxes | — | 9,945 | |||||||||
| Total current assets | 1,614,773 | 1,554,625 | |||||||||
| Property, plant and equipment, net | 617,313 | 597,727 | |||||||||
| Goodwill and other assets | 1,179,178 | 800,808 | |||||||||
| $ | 3,411,264 | $ | 2,953,160 | ||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||
Current liabilities: | |||||||||||
| Current installments of long-term debt | $ | 4,803 | $ | 2,748 | |||||||
| Notes payable to banks | 13,765 | 35,147 | |||||||||
| Accounts payable | 338,723 | 268,099 | |||||||||
| Accrued expenses | 241,058 | 227,735 | |||||||||
| Contract liability - billings in excess of costs and earnings | 138,286 | 130,018 | |||||||||
| Income taxes payable | 3,734 | — | |||||||||
| Dividend payable | 10,610 | 9,556 | |||||||||
| Total current liabilities | 750,979 | 673,303 | |||||||||
| Long-term debt, excluding current installments | 897,488 | 728,431 | |||||||||
| Operating lease liabilities | 148,031 | 80,202 | |||||||||
| Other long-term liabilities | 270,034 | 263,388 | |||||||||
| Shareholders' equity | 1,344,732 | 1,207,836 | |||||||||
| $ | 3,411,264 | $ | 2,953,160 | ||||||||
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| Third Quarter | |||||||||||
| 39 Weeks Ended | |||||||||||
| 25-Sep-21 | 26-Sep-20 | ||||||||||
| Cash flows from operating activities | |||||||||||
| Net Earnings | $ | 169,911 | $ | 105,703 | |||||||
| Depreciation and amortization | 67,764 | 61,523 | |||||||||
| Impairment of long-lived assets | — | 19,449 | |||||||||
| Contribution to defined benefit pension plan | (970) | (17,398) | |||||||||
| Change in working capital | (157,473) | 119,617 | |||||||||
| Other | (17,403) | (15,848) | |||||||||
| Net cash flows from operating activities | 61,829 | 273,046 | |||||||||
| Cash flows from investing activities | |||||||||||
Purchase of property, plant, and equipment | (80,509) | (70,960) | |||||||||
| Acquisitions | (312,500) | (15,862) | |||||||||
| Other | 3,546 | 15,437 | |||||||||
| Net cash flows from investing activities | (389,463) | (71,385) | |||||||||
| Cash flows from financing activities | |||||||||||
Proceeds from long-term borrowings | 236,710 | 88,872 | |||||||||
| Principal payments on long-term borrowings | (66,128) | (76,417) | |||||||||
| Payments on short-term borrowings | (20,463) | (6,462) | |||||||||
| Purchase of treasury shares | (24,101) | (28,006) | |||||||||
| Purchase of noncontrolling interest | — | (55,916) | |||||||||
| Dividends paid | (30,794) | (27,316) | |||||||||
| Other | 5,792 | (4,739) | |||||||||
| Net cash flows from financing activities | 101,016 | (109,984) | |||||||||
| Effect of exchange rates on cash and cash equivalents | (4,313) | (2,164) | |||||||||
| Net change in cash and cash equivalents | (230,931) | 89,513 | |||||||||
| Cash and cash equivalents - beginning of year | 400,726 | 353,542 | |||||||||
| Cash and cash equivalents - end of period | $ | 169,795 | $ | 443,055 | |||||||
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 1) the intangible asset amortization and stock-based compensation recognized on the Prospera subsidiary, 2) a write off a receivable following arbitration of a commercial transaction from 2014, 3) acquisition diligence, 4) restructuring expenses on segment operating income and net earnings and 6) the impact of the U.K. tax rate change on net earnings (adjusts statutory tax rate from 19% to 25%). Amounts may be impacted by rounding. We believe the adjustments for Prospera allow for a better comparison of future Irrigation segment performance as compared to historical results. 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 September 25, 2021 | Diluted | Thirty-nine weeks ended September 25, 2021 | Diluted | ||||||||||||||||||||
| earnings per | earnings per | ||||||||||||||||||||||
| share | share | ||||||||||||||||||||||
| Net earnings attributable to Valmont Industries, Inc. - as reported | $ | 51,650 | $ | 2.40 | $ | 168,774 | $ | 7.86 | |||||||||||||||
| Prospera intangible asset amortization | 1,926 | 0.09 | 1,926 | 0.09 | |||||||||||||||||||
| Stock-based compensation - Prospera subsidiary | 2,312 | 0.11 | 2,312 | 0.11 | |||||||||||||||||||
Write-off of a receivable, pre-tax | — | — | 5,545 | 0.26 | |||||||||||||||||||
| Acquisition diligence expense, pre-tax | — | — | 1,120 | 0.05 | |||||||||||||||||||
Restructuring expense, pre-tax | — | — | 1,560 | 0.07 | |||||||||||||||||||
| Total Adjustments | 4,238 | 0.20 | 12,463 | 0.58 | |||||||||||||||||||
| Change in U.K. statutory tax rate | — | — | (2,819) | (0.13) | |||||||||||||||||||
| Tax effect of adjustments * | (604) | (0.03) | (2,358) | (0.11) | |||||||||||||||||||
| Net earnings attributable to Valmont Industries, Inc. - Adjusted | $ | 55,284 | $ | 2.57 | $ | 176,060 | $ | 8.20 | |||||||||||||||
| Average shares outstanding (000’s) - Diluted | 21,552 | 21,483 | |||||||||||||||||||||
* The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.
| Thirteen weeks ended September 25, 2021 | ||||||||||||||||||||||||||||||||||||||
Operating Income Reconciliation | Engineered Support Structures | Utility Support Structures | Coatings | Irrigation | Corporate | Valmont | ||||||||||||||||||||||||||||||||
Operating income - as reported | $ | 34,383 | $ | 24,561 | $ | 12,478 | $ | 27,735 | $ | (22,962) | $ | 76,195 | ||||||||||||||||||||||||||
| Prospera intangible asset amortization | — | — | — | 1,926 | — | 1,926 | ||||||||||||||||||||||||||||||||
| Stock-based compensation - Prospera subsidiary | — | — | — | 2,312 | — | 2,312 | ||||||||||||||||||||||||||||||||
Adjusted Operating Income | $ | 34,383 | $ | 24,561 | $ | 12,478 | $ | 31,973 | $ | (22,962) | $ | 80,433 | ||||||||||||||||||||||||||
Net Sales - as reported | 281,097 | 276,502 | 96,685 | 240,331 | NM | 868,782 | ||||||||||||||||||||||||||||||||
Operating Income as a % of Sales | 12.2 | % | 8.9 | % | 12.9 | % | 11.5 | % | NM | 8.8 | % | |||||||||||||||||||||||||||
Adjusted Operating Income as a % of Sales | 12.2 | % | 8.9 | % | 12.9 | % | 13.3 | % | NM | 9.3 | % | |||||||||||||||||||||||||||
| Thirty-nine weeks ended September 25, 2021 | ||||||||||||||||||||||||||||||||||||||
Operating Income Reconciliation | Engineered Support Structures | Utility Support Structures | Coatings | Irrigation | Corporate | Valmont | ||||||||||||||||||||||||||||||||
Operating income - as reported | $ | 86,235 | $ | 61,168 | $ | 40,018 | $ | 108,467 | $ | (59,857) | $ | 236,031 | ||||||||||||||||||||||||||
| Prospera intangible asset amortization | — | — | — | 1,926 | — | 1,926 | ||||||||||||||||||||||||||||||||
| Stock-based compensation - Prospera subsidiary | — | — | — | 2,312 | — | 2,312 | ||||||||||||||||||||||||||||||||
| Write off 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 | $ | 86,235 | $ | 67,363 | $ | 40,018 | $ | 113,615 | $ | (58,737) | $ | 248,494 | ||||||||||||||||||||||||||
Net Sales - as reported | 772,813 | 797,498 | 288,131 | 751,960 | NM | 2,538,297 | ||||||||||||||||||||||||||||||||
Operating Income as a % of Sales | 11.2 | % | 7.7 | % | 13.9 | % | 14.4 | % | NM | 9.3 | % | |||||||||||||||||||||||||||
Adjusted Operating Income as a % of Sales | 11.2 | % | 8.4 | % | 13.9 | % | 15.1 | % | NM | 9.8 | % | |||||||||||||||||||||||||||
The non-GAAP tables below disclose the impact of impairment of goodwill, tradenames, and a facility, restructuring costs on segment operating income and net earnings as well as the impact of the U.K. tax rate change on net earnings (adjusts statutory tax rate from 17% to 19%). 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 for the second quarter and first half of fiscal 2020.
| Thirteen weeks ended September 26, 2020 | Diluted | Thirty-nine weeks ended September 26, 2020 | Diluted | ||||||||||||||||||||
| earnings per | earnings per | ||||||||||||||||||||||
| share | share | ||||||||||||||||||||||
| Net earnings attributable to Valmont Industries, Inc. - as reported | $ | 39,342 | $ | 1.84 | $ | 104,878 | $ | 4.89 | |||||||||||||||
Impairment of goodwill and tradename, pre-tax | — | — | 16,638 | 0.78 | |||||||||||||||||||
Restructuring and related asset impairment costs - pre-tax | 5,632 | 0.26 | 11,211 | 0.52 | |||||||||||||||||||
| Total Adjustments | 5,632 | 0.26 | 27,849 | 1.30 | |||||||||||||||||||
| Tax effect of adjustments * | (776) | (0.04) | (2,753) | (0.13) | |||||||||||||||||||
| UK tax rate change | (1,528) | (0.07) | (1,528) | (0.07) | |||||||||||||||||||
| Net earnings attributable to Valmont Industries, Inc. - Adjusted | $ | 42,670 | $ | 1.99 | $ | 128,446 | $ | 5.99 | |||||||||||||||
| Average shares outstanding (000’s) - Diluted | 21,416 | 21,453 | |||||||||||||||||||||
* The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.
| Thirteen weeks ended September 26, 2020 | ||||||||||||||||||||||||||||||||||||||
Operating Income Reconciliation | Engineered Support Structures | Utility Support Structures | Coatings | Irrigation | Corporate | Valmont | ||||||||||||||||||||||||||||||||
Operating income - as reported | $ | 25,434 | $ | 25,881 | $ | 12,416 | $ | 14,687 | $ | (16,939) | $ | 61,479 | ||||||||||||||||||||||||||
| Impairment of goodwill and tradename | — | — | — | — | — | |||||||||||||||||||||||||||||||||
Restructuring and related asset impairment costs | 902 | 3,301 | 1,284 | — | 145 | 5,632 | ||||||||||||||||||||||||||||||||
Adjusted Operating Income | $ | 26,336 | $ | 29,182 | $ | 13,700 | $ | 14,687 | $ | (16,794) | $ | 67,111 | ||||||||||||||||||||||||||
Net Sales - as reported | 255,656 | 274,393 | 87,886 | 139,209 | NM | 733,970 | ||||||||||||||||||||||||||||||||
Operating Income as a % of Sales | 9.9 | % | 9.4 | % | 14.1 | % | 10.6 | % | NM | 8.4 | % | |||||||||||||||||||||||||||
Adjusted Operating Income as a % of Sales | 10.3 | % | 10.6 | % | 15.6 | % | 10.6 | % | NM | 9.1 | % | |||||||||||||||||||||||||||
| Thirty-nine weeks ended September 26, 2020 | ||||||||||||||||||||||||||||||||||||||
Operating Income Reconciliation | Engineered Support Structures | Utility Support Structures | Coatings | Irrigation | Corporate | Valmont | ||||||||||||||||||||||||||||||||
Operating income - as reported | $ | 46,183 | $ | 75,255 | $ | 33,618 | $ | 60,701 | $ | (43,943) | $ | 171,814 | ||||||||||||||||||||||||||
| Impairment of goodwill and tradename | 16,638 | — | — | — | — | 16,638 | ||||||||||||||||||||||||||||||||
| Restructuring and related asset impairment costs | 2,364 | 6,975 | 1,506 | — | 366 | 11,211 | ||||||||||||||||||||||||||||||||
Adjusted Operating Income | $ | 65,185 | $ | 82,230 | $ | 35,124 | $ | 60,701 | $ | (43,577) | $ | 199,663 | ||||||||||||||||||||||||||
Net Sales - as reported | 739,783 | 731,178 | 255,976 | 446,568 | NM | 2,096,978 | ||||||||||||||||||||||||||||||||
Operating Income as a % of Sales | 6.2 | % | 10.3 | % | 13.1 | % | 13.6 | % | NM | 8.2 | % | |||||||||||||||||||||||||||
Adjusted Operating Income as a % of Sales | 8.8 | % | 11.2 | % | 13.7 | % | 13.6 | % | NM | 9.5 | % | |||||||||||||||||||||||||||
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) write off a receivable following arbitration 2) restructuring costs, 3) acquisition diligence costs and 4) six months of (a) amortization of the technology intangible asset (Prospera Technologies) and (b) share-based compensation for Prospera employees and 5) the increase in the U.K. statutory tax rate. We believe the adjustments for Prospera allow for a better comparison of future Irrigation 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 for fiscal 2021.
| Reconciliation of Range of Net Earnings - Full Year 2021 | Low End | High End | Adjustments | ||||||||||||||
| Estimated net earnings - GAAP | $ | 217,000 | $ | 228,000 | |||||||||||||
Write-off of a receivable, pre-tax | 5,545 | ||||||||||||||||
| Acquisition diligence expense, pre-tax | 1,120 | ||||||||||||||||
| Estimated restructuring expense, pre-tax | 1,560 | ||||||||||||||||
| Prospera intangible asset (proprietary technology) amortization, pre-tax | 3,750 | ||||||||||||||||
| Share-based compensation - Prospera (ML & AI subsidiary), pre-tax | 4,950 | ||||||||||||||||
| Total pre-tax adjustments | 16,925 | ||||||||||||||||
| Estimated tax benefit from above expenses* | (3,106) | ||||||||||||||||
| Change in U.K. statutory tax rate | (2,819) | ||||||||||||||||
| Total Adjustments, after-tax | $ | 11,000 | |||||||||||||||
| Estimated net earnings - Adjusted | $ | 228,000 | $ | 239,000 | |||||||||||||
| Diluted Earnings Per Share Range - GAAP | $ | 10.10 | $ | 10.60 | |||||||||||||
| Diluted Earnings Per Share Range - Adjusted | $ | 10.60 | $ | 11.10 | |||||||||||||
* The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.
###
© 2021 Valmont® Industries, Inc. Valmont Industries, Inc. Third Quarter Earnings Presentation October 21, 2021
Disclosure Regarding Forward-Looking Statements 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 effects on the Company’s business and that of its customers and suppliers, competitor 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. 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. October 21, 20212 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
| Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 20213 STEVE KANIEWSKI PRESIDENT & CHIEF EXECUTIVE OFFICER
3Q 2021 Segment Sales and Segment Summaries October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation4 Significant Irrigation Revenue Growth • Strong underlying market demand for improving grid resiliency and renewable energy usage, and increased pricing driving continued sales growth • Higher pricing and volumes mostly offset by combined solar and offshore wind projects in 2020 that did not repeat or were pushed to future quarters from customers’ supply chain disruptions • North American utilities increasing planned investments in transmission and distribution projects • Focus on pricing and sales growth of more than 25% in wireless communication products and components driven by 5G buildouts and heavy investments by the major carriers • 3Q operating profit margins above 12% for first time • International markets benefiting from higher stimulus and infrastructure investments, especially in Australia • Sales growth led by pricing and improved economic conditions compared to last year • Incremental sales from our new greenfield facility in Pittsburgh • N.A. sales grew nearly 55% as strong market fundamentals and improved net farm income projections continue to positively impact farmer sentiment, generating very strong order flow • International sales nearly doubled YoY, led by solid demand in Middle East and Africa, including deliveries of the Egypt project, and another record sales quarter in Brazil • Backlog at end of third quarter was $388M, up 26% YoY SEGMENT SUMMARIES TOTAL 3Q 2021 SALES: $868.8M $276.5M $281.1M $96.7M $240.3M Utility Support Structures Engineered Support Structures Coatings Irrigation N.A.: $116.3M | International: $124.0M 31.8% of Sales 32.4% of Sales 11.1% of Sales 27.7% of Sales
Conserving Resources and Improving Life in Sudan 5 Enhancing Productivity, Empowering Local Communities, Building a More Sustainable World | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 Sudan’s Agriculture Sector1 Evolving from subsistence farming to industrial scale • 40% of GDP • 80% of workforce Problems in the Region • Arid conditions • Lack of direct access to electricity in the region Valmont Solar Solutions Installed solar plant to bring power to center pivots • No battery or secondary energy source needed • 100% independent from the grid 1 Source: CIA The World Factbook – Sudan Economy
AVNER APPLBAUM EVP & CHIEF FINANCIAL OFFICER | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 20216
3Q 2021 Financial Summary October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation7 Sales Operating Income Diluted EPS GAAP Adjusted1 GAAP Adjusted1 18.4% 23.9% 19.8% 30.4% 29.1% • Record third quarter sales as growth was realized in all segments, led by higher pricing and strong, broad-based market demand, with particularly substantial sales growth in Irrigation • Operating income improved to 8.8% of sales (9.3% adjusted1) despite ongoing inflationary pressures of higher raw materials, freight and labor • Driven by higher volumes in Irrigation and favorable pricing, notably in Engineered Support Structures • Primarily driven by higher operating income and a more favorable tax rate of 23.5%, which was realized through the execution of certain tax planning strategies $M, except for per share amounts $76.2 $61.5 $80.4 $67.1 2021 2020 2021 2020 $868.8 $734.0 2021 2020 $2.40 $1.84 $2.57 $1.99 2021 2020 2021 2020 1 Please see Reg G reconciliation to GAAP measures at end of document.
Sales Operating Income1 0.8% 3Q 2021 Results | Utility Support Structures 8 ($M) Key Statistics 2020 Sales $ 274.4 Intersegment Sales (1.9) Volume (22.3) Pricing/Mix 25.6 Acquisitions/Divestiture - Currency Translation 0.7 2021 Sales $ 276.5 $276.5 $274.4 2021 2020 COMMENTARY • Significantly higher pricing and higher volumes in North American markets due to utilities' ongoing investments in grid resiliency were mostly offset by lower global generation sales primarily related to large projects in 2020 that did not repeat this year • Higher average selling prices were more than offset by the impact of continued raw material cost inflation that was not yet fully recovered through pricing mechanisms during the quarter, and lower global generation product sales • The impact of workforce quarantines in a few North American facilities led to operational inefficiencies October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation $24.6 $25.9 $29.2 2021 2020 2020 Adj. 1 Please see Reg G reconciliation to GAAP measures at end of document.
Sales Operating Income1 9.9% 3Q 2021 Results | Engineered Support Structures October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation9 ($M) $281.1 $255.7 2021 2020 $34.4 $25.4 $26.3 2021 2020 2020 Adj. COMMENTARY • Favorable pricing in all regions and higher sales of wireless communication products and components • Lighting and transportation sales of $188.6M increased 3.9% YoY, as favorable pricing and higher commercial lighting sales more than offset lower transportation volumes in most regions • Wireless communication products and components sales of $63.4M increased 25.2% YoY; capital investments from wireless carriers supporting 5G buildouts, and favorable pricing led to sales growth • Access systems sales of $29.1M increased 24.3% YoY, primarily due to improved end markets in Australia • Profitability improvement was driven by favorable pricing and improved fixed cost leverage, including SG&A Key Statistics 2020 Sales $ 255.7 Intersegment Sales (0.7) Volume (1.3) Pricing/Mix 21.6 Acquisitions/Divestiture - Currency Translation 5.8 2021 Sales $ 281.1 1 Please see Reg G reconciliation to GAAP measures at end of document.
3Q 2021 Results | Coatings October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation10 ($M) COMMENTARY • Higher average selling prices and sales from the new greenfield facility in Pittsburgh, PA that commenced operations earlier this year • Lower profitability was driven by higher cost inflation that was not fully recovered by price, and startup costs related to new Pittsburgh facility Key Statistics 2020 Sales $ 87.9 Intersegment Sales 2.6 Volume 0.5 Pricing/Mix 4.6 Acquisitions/Divestiture - Currency Translation 1.1 2021 Sales $ 96.7 Sales Operating Income1 10.0% $96.7 $87.9 2021 2020 $12.5 $12.4 $13.7 2021 2020 2020 Adj. 1 Please see Reg G reconciliation to GAAP measures at end of document.
Sales Operating Income1 53.4% 95.6% 3Q 2021 Results | Irrigation October 21, 202111 ($M) $27.7 $32.0 $14.7 2021 2021 Adj. 20202021 2020 $116.3 $124.0 $75.8 $63.4 North America International | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation Key Statistics 2020 Sales $ 139.2 Intersegment Sales 2.6 Volume 55.7 Pricing/Mix 39.3 Acquisitions/Divestiture 1.2 Currency Translation 2.3 2021 Sales $ 240.3 1 Please see Reg G reconciliation to GAAP measures at end of document. COMMENTARY • Higher volumes in all markets, particularly Egypt, North America and Brazil as well as favorable pricing and higher technology sales • North American sales growth led by favorable pricing, higher volumes due to continued strength in ag markets and higher industrial tubing sales • Int’l sales growth was led by continued strong demand in the Middle East including deliveries of the large Egypt project, and higher sales in Brazil, Africa and Europe • Global backlog increased 26.0% YoY to $388.0M, demonstrating the underlying strength in agricultural markets globally • Profitability growth was driven by higher volumes, favorable pricing and improved operational efficiencies, partially offset by higher SG&A expense from recent Prospera acquisition
3Q 2021 Cash Flow Highlights October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation12 Strategically Securing Raw Material Availability to Support Strong Sales Growth ($M) YTD 9/25/2021 Net Cash Flows from Operating Activities $ 61.8 Net Cash Flows from Investing Activities (389.5) Net Cash Flows from Financing Activities 101.0 Net Cash Flows from Operating Activities $ 61.8 Purchase of Property, Plant & Equipment (80.5) Free Cash Flows $ (18.7) 3Q Cash Flow | FCF Reconciliation Cash and Debt Highlights $169.8M ($145.0M ex-U.S.) Cash at 9/25/2021 $897.5M Total Long-term Debt at 9/25/2021
Balanced Approach to Capital Allocation October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation13 $81 $313 $24 $31 Capital Expenditures Acquisitions Share Repurchases Dividends 2021 YTD Capital Deployment: $449M Capital Expenditures • 2021 CapEx expected to be $110M - $120M • Investments to support strategic growth initiatives and Industry 4.0 advanced manufacturing Acquisitions • Strategic fit + market expansion • Returns exceeding cost of capital within 3 years Share Repurchases • Opportunistic approach, supported by FCF • Repurchased 10,759 shares in 3Q at an average price of $232.37 per share • ~$124M remains on current authorization as of 9/25/21 Dividends • 11% dividend increase announced February 2021 • Payout ratio target: 22% of earnings • Current payout: ~19% G ro w in g O ur B us in es s R et ur ni ng C as h to Sh ar eh ol de rs
Strong Balance Sheet and Liquidity October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation14 Cash $169.8M Total Long-Term Debt $897.5M Shareholders’ Equity $1,344.7M Total Debt to Adj. EBITDA1 1.85x Available Credit under Revolving Credit Facility2 $615.6M Cash $169.8M Total Available Liquidity $785.4M AS OF SEPTEMBER 25, 20211 ► Long-term debt of $897.5M, mostly fixed-rate, with long-dated maturities to 2044 and 2054 ► Capital allocation strategy has not changed, and the primary focus is to maintain liquidity to support operations and maintain investment grade credit rating − Purchased $2.5M of company stock in Q3, and $123.9M remains on current authorization 1 The values on this slide are calculated in accordance with the amended credit facility dated October 18, 2021. See slide 30 for calculation of Adjusted EBITDA and Leverage Ratio. 2 $800M Total Revolver less borrowings and Standby LC’s of $184M.
Full Year 2021 Outlook and Key Assumptions 15 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 PREVIOUS FY21 OUTLOOK1 KEY ASSUMPTIONS • Favorable foreign currency translation impact of ~1% of Net Sales • Expect fourth quarter tax rate of ~24.0% • CapEx to be in the range of $110M - $120M to support strategic growth initiatives and Industry 4.0 advanced manufacturing initiatives • No pandemic-related closures of large manufacturing facilities, workforce disruptions, or significant supply chain interruptions 16% – 19% Increase in Net Sales YoY 1 Exclusive of potential future restructuring activities. 2 Please see Reg G reconciliation to GAAP measures at end of document. $9.90 – $10.60 GAAP Diluted EPS 45% – 50% Increase in Irrigation Segment Sales YoY 17% – 18% Increase in Net Sales YoY $10.10 – $10.60 GAAP Diluted EPS 50% – 53% Increase in Irrigation Segment Sales YoY CURRENT FY21 OUTLOOK1 $10.40 - $11.10 Adj. Diluted EPS2 $10.60 – $11.10 Adj. Diluted EPS2
2021 Segment Outlook October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation16 Positive Momentum Across All Businesses USS • Expect sequential margin improvement as pricing becomes more aligned with steel cost inflation • Backlog indicative of long-term market drivers of grid resiliency and the increasing use of renewable energy ESS • Stable market conditions in North American transportation markets; order rates are beginning to improve • Demand for wireless communication products and components remains very strong and we are on track to grow sales 15% - 20% • Long-term need for critical infrastructure investment globally, including current and future stimulus, will continue to benefit global markets giving us confidence in future growth • Benefiting from increasing demand in wireless communications markets as 5G buildouts are accelerating COATINGS • Trending in-line with industrial production levels • Remain focused on pricing actions and providing value to our customers IRRIGATION • Expect sales to grow 50% - 53% this year, based on strength in global underlying ag fundamentals and a strong global backlog • Favorable market trends globally and a solid international project pipeline providing strong momentum well into next year • Certain grain commodity prices are off of recent highs but remain at elevated levels; we believe these trends remain positive for farmer sentiment • Deliveries of the large project for Egypt began in 4Q 2020, which will affect YoY growth comparisons
Fundamental Market Drivers Remain Resilient 17 Record Backlog of More than $1.5B at the End of the Third Quarter | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 COATINGS IRRIGATION • Closely following industrial production trends • Global preservation of critical infrastructure over long-term • Increased number of economies actively fighting costs of corrosion will drive need to extend life of steel products globally over long- term • Fits well within ESG principles • Global ag market fundamentals remain strong • Net farm income improvements are driving positive farmer sentiment • Improved demand along with strength across international markets and the large Egypt is providing a good line of sight into 2022 • Critical need for infrastructure investment provides very good economic stimulus • Solid long-term market trends for road construction and single-family housing • Carriers’ investments support work and school-at-home and macro buildouts in suburban and rural communities, aligning with favorable trends in residential construction • Strong backlog demonstrates ongoing demand and necessity for renewables, grid hardening and expanding ESG focus within utility industry • Well-positioned to be a preferred strategic partner with utilities and developers for their renewable energy goals ESSUSS
Ability to grow sales through innovation and execution while being flexible and responding quickly to meet customer needs Improved operating margins by executing on our pricing strategies and advancing operational excellence across our footprint Invested in our employees and technology to drive new products and services, and build upon the strength of our operations Disciplined capital allocation allocating capital to high-growth strategic investments while returning capital to shareholders through dividends and share repurchases Summary 18 Poised and Well Positioned to Capture Growth and Drive Stakeholder Value in the Future | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 01 02 03 04
Q&A 19 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021
APPENDIX 20 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021
3Q 2021 Financial Summary 21 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 Net Sales 2021 2020 Change YTD 2021 YTD 2020 Change Utility Support Structures $ 276.5 $ 274.4 0.8% $ 797.5 $ 731.2 9.1% Engineered Support Structures 281.1 255.7 9.9% 772.8 739.8 4.5% Coatings 96.7 87.9 10.0% 288.1 256.0 12.5% Irrigation 240.3 139.2 72.6% 752.0 446.6 68.4% Intersegment Sales1 (25.8) (23.2) NM (72.1) (76.5) NM Net Sales $ 868.8 $ 734.0 18.4% $ 2,538.3 $ 2,097.0 21.0% Operating Income $ 76.2 $ 61.5 23.9% $ 236.0 $ 171.8 37.4% Adjusted Operating Income2 $ 80.4 $ 67.1 19.8% $ 248.5 $ 199.7 24.4% Net Income $ 51.7 $ 39.3 31.6% $ 168.8 $ 104.9 60.9% Diluted Earnings Per Share (EPS) $ 2.40 $ 1.84 30.4% $ 7.86 $ 4.89 60.7% Adjusted Diluted Earnings Per Share (EPS)2 $ 2.57 $ 1.99 29.1% $ 8.20 $ 5.99 36.9% $M, except for per share amounts .1Includes rounding 2Please see Reg G reconciliation to GAAP measures at end of document..
Steel Material Index Trends 2020-2021 YTD 22 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 Since the last update (July 2nd), the AMM material index has increased from $1,500 to $1,852.9; an increase of 352.9 points or 23.5%. Source: FastMarketsAMM.
State Transportation Investment Funding Measures 23 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 • State legislators have introduced 198 transportation funding measures in 2021 • Funding Approved in 2021 Legislative Session: $29.55 billion • One-time funding bills, including allocation of federal Covid-19 relief funds, were approved in twelve states for a total of $23.4 billion Source: Transportation Investment Advocacy Center.
State Transportation Investment Funding Measures by Type 24 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 Source: Transportation Investment Advocacy Center. Increased Fuel Tax Electric Vehicle Fee Road Usage Fee
5G Adoption Forecast and Capex Spend Post-COVID 25 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 Source: GSM Association.
U.S. Net Farm Income October 21, 202126 Source: USDA Farm Income Data 10 11 13 12 14 22 46 28 82 71 49 63 67 57 49 85 0 20 40 60 80 100 120 2014 2015 2016 2017 2018 2019 2020 2021F Net Farm Income w/ Government Payments Dir. Gov't Payments NFI, less Gov't Payments 92 75 62 82 ($ B) 81 79 95 113 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
U.S. Net Cash Farm Income by Year October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation27 Source: USDA, American Farm Bureau Federation
2011-2020 Historical Free Cash Flow1 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation28 10 Year Average FCF is $154M; Last 5 Years Has Averaged $151M 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Net cash flows from operating activities $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 Net cash flows from investing activities (84.1) (136.7) (131.7) (256.9) (48.2) (53.0) (49.6) (155.4) (168.1) (104.0) Net cash flows from financing activities (45.9) (16.4) (37.4) (136.8) (32.0) (95.2) (220.0) (162.1) (98.9) (173.8) Net cash flows from operating activities $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 Purchase of plant, property, and equipment (83.1) (97.1) (106.8) (73.0) (45.5) (57.9) (55.3) (72.0) (97.4) (106.7) Free Cash flows 66.6 100.0 289.7 101.1 226.8 174.9 77.8 81.0 210.2 209.6 Net earnings attributed to Valmont Industries, Inc. $ 228.3 $ 234.1 $ 278.5 $ 183.9 $ 40.1 $ 173.2 $ 116.2 $ 94.4 $ 153.8 $ 140.7 Adjusted net earnings attributed to Valmont Industries, Inc.1 $ 162.3 N/A $ 295.1 $ 187.7 $ 131.7 $ 137.6 $ 158.4 $ 123.0 N/A 163.8 Free Cash Flow Conversion - GAAP 0.29 0.43 1.04 0.55 5.66 1.01 0.67 0.86 1.37 1.49 Free Cash Flow Conversion - Adjusted 0.41 N/A 0.98 0.53 1.71 1.27 0.49 0.66 N/A 1.28 1) Reconciliation of Net Earnings to Adjusted Figures Net earnings attributed to Valmont Industries, Inc. $ 228.3 $ 234.1 $ 278.5 $ 183.9 $ 40.1 $ 173.2 $ 116.2 $ 94.4 $ 153.8 $ 140.7 Change in valuation allowance against deferred tax assets (66.0) — — — 7.1 (20.7) 41.9 — — — Impairment of long-lived assets — — 12.2 — 61.8 1.1 — 28.6 — 23.1 Reversal of contingent liability — — — — — (16.6) — — — — Other non-recurring expenses (non-cash) 18. 8.1 — — — — — 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. $ 162.3 $ 234.1 $ 295.1 $ 187.7 $ 131.7 $ 137.6 $ 158.4 $ 123.0 $ 153.8 $ 163.8 ($M) 1 Adjusted earnings for purposes of calculating FCF conversion may not agree to the adjusted net earnings. The difference is due to cash restructuring, debt refinancing, or other non-recurring expenses which were settled in cash in the year of occurrence.
Years of rapid raw material cost inflation GAAP 0.29X 0.43X 1.04X 0.55X 5.66X 1.01X 0.67X 0.86X 1.37X 1.49X Adj. 0.41X N/A 0.98X 0.53X 1.71X 1.27X 0.49X 0.66X N/A 1.28X 2011 – 2020 Free Cash Flow1 ($M) 67 100 290 101 227 175 78 81 210 210 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 10-yr Avg. $154M GAAP 1.34X Adj. 0.91X Historical FCF Conversion by Year1 Strong Free Cash Flow throughout the Cycle 29 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 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.
Calculation of Adjusted EBITDA and Leverage Ratio 30 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021 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-Sep-21 Net earnings attributable to Valmont Industries, Inc. $ 204,590 Interest expense 41,976 Income tax expense 56,765 Stock-based compensation 24,034 Depreciation and amortization expense 89,133 EBITDA 416,498 Cash restructuring expenses 13,277 Adjusted EBITDA – last four quarters $ 429,775 Net indebtedness $ 796,261 Leverage Ratio 1.85 Interest-bearing debt $ 916,056 Less: Cash and cash equivalents in excess of $50 million 119,795 Net indebtedness 796,261 ($000s)
Summary of Effect of Significant Non-Recurring Items on Reported Results 31 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021
Summary of Effect of Significant Non-Recurring Items on Reported Results 32 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021
Summary of Effect of Significant Non-Recurring Items on Reported Results 33 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021
Summary of Effect of Significant Non-Recurring Items on Reported Results 34 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021
Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings 35 | Valmont Industries, Inc. | 3Q 2021 Earnings PresentationOctober 21, 2021