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
October 26, 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
(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.
☐
Item 2.02. Results of Operations and Financial Condition.
Valmont Industries, Inc. issued a press release on October 26, 2022 announcing its financial results for its fiscal quarter ended September 24, 2022. The press release, along with the presentation to be used during its earnings call on October 27, 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 October 26, 2022 |
| 99.2 | | Presentation Slides for earnings call on October 27, 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: | October 26, 2022 | | | |
| | By: | /s/ AVNER M. APPLBAUM | ||
| | | Name: | Avner M. Applbaum | |
| | | Title: | Executive Vice President and Chief Financial Officer |
Exhibit **** 99.1
| | | |
|---|---|---|
| | FOR IMMEDIATE RELEASE | |
| | | |
| Contact: | Renee Campbell | |
| Email: | renee.campbell@valmont.com | |
| Date: | October 26, 2022 | |
Valmont Reports Third Quarter 2022 Results
Record Sales and Earnings Reflect Continued Strong Demand Across Infrastructure and Agriculture Markets
Providing Preliminary Sales and Earnings Per Share Guidance for 2023
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 third quarter ended September 24, 2022.
Third Quarter 2022 Highlights (all metrics compared to Third Quarter 2021 unless otherwise noted)
| ● | Record Third Quarter Net Sales of $1.1 billion increased 26.3% |
|---|
| ● | Operating Income increased 44.3% to $110.0 million, or 10.0% of net sales (increased 41.9% to $114.1 million or 10.4% adjusted^1^) compared to $76.2 million or 8.8% of net sales ($80.4 million or 9.3% adjusted^1^)<br> |
|---|---|
| ● | Record Third Quarter Diluted Earnings per Share (EPS) of $3.34 ($3.49 adjusted^1^) compared to $2.40 ($2.57 adjusted^1^)<br> |
| --- | --- |
| ● | Generated strong third quarter operating cash flows of $116 million driven by better overall working capital management including a reduction in inventory compared to second quarter 2022 |
| --- | --- |
| ● | Record backlog of $2.0 billion, an increase of 25.4% or $412 million since the end of fiscal 2021 and sequentially higher due to continued strong market demand across the portfolio<br> |
|---|---|
| ● | Returned $22.4 million to shareholders through dividends and share repurchases |
| --- | --- |
^1^ Please see Reg G reconciliation to GAAP measures at end of document
Key Financial Metrics
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Third Quarter 2022 | | GAAP | | Adjusted^1^ | | |||||||||||||
| (000's except per share amounts) | **** | 09/24/2022 | **** | 09/25/2021 | **** | | **** | 09/24/2022 | **** | 09/25/2021 | **** | | | |||||
| | | Q3 2022 | | Q3 2021 | | vs. Q3 2021 | | Q3 2022 | | Q3 2021 | | vs. Q3 2021 | | |||||
| Net Sales | | $ | 1,097,382 | | $ | 868,782 | | 26.3 | % | | $ | 1,097,382 | | $ | 868,782 | | 26.3 | % |
| Operating Income | | | 109,972 | | | 76,195 | | 44.3 | % | | | 114,147 | | | 80,433 | | 41.9 | % |
| Operating Income as a % of Net Sales | | | 10.0 | % | | 8.8 | % | | | | | 10.4 | % | | 9.3 | % | | |
| Net Earnings | | | 72,112 | | | 51,650 | | 39.6 | % | | | 75,313 | | | 55,284 | | 36.2 | % |
| Diluted Earnings Per Share | | $ | 3.34 | | $ | 2.40 | | 39.2 | % | | $ | 3.49 | | $ | 2.57 | | 35.8 | % |
| Average Shares Outstanding | | | 21,605 | | | 21,552 | | | | | | 21,605 | | | 21,552 | | |
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| YTD 2022 | | GAAP | | Adjusted^1^ | | |||||||||||||
| (000's except per share amounts) | **** | 09/24/2022 | **** | 09/25/2021 | **** | | **** | 09/24/2022 | **** | 09/25/2021 | **** | | | |||||
| | | FY 2022 | | FY 2021 | | vs. FY 2021 | | FY 2022 | | FY 2021 | | vs. FY 2021 | | |||||
| Net Sales | | $ | 3,213,734 | | $ | 2,538,297 | | 26.6 | % | | $ | 3,213,734 | | $ | 2,538,297 | | 26.6 | % |
| Operating Income | | | 323,533 | | | 236,031 | | 37.1 | % | | | 335,991 | | | 248,494 | | 35.2 | % |
| Operating Income as a % of Net Sales | | | 10.1 | % | | 9.3 | % | | | | | 10.5 | % | | 9.8 | % | | |
| Net Earnings | | | 210,531 | | | 168,774 | | 24.7 | % | | | 220,883 | | | 176,060 | | 25.5 | % |
| Diluted Earnings Per Share | | $ | 9.77 | | $ | 7.86 | | 24.3 | % | | $ | 10.25 | | $ | 8.20 | | 25.0 | % |
| Average Shares Outstanding | | | 21,546 | | | 21,483 | | | | | | 21,546 | | | 21,483 | | |
“I am extremely pleased with the outstanding performance and record results delivered by the entire Valmont team this quarter,” said Stephen G. Kaniewski, President and Chief Executive Officer. “We continue to see strong demand globally for our products and solutions across infrastructure and agriculture markets. Broad-based infrastructure market strength is being driven by continued investments in grid resiliency and upgrades to aging infrastructure, ongoing demand for renewable power and clean energy solutions and the 5G network transition. Agriculture markets remain extremely favorable, as elevated commodity prices are being driven by tighter global grain supplies, ongoing demand for increased food production and a heightened focus on food security concerns. The typical seasonal decline in third quarter North America agriculture sales was less pronounced this year due to ongoing delivery of backlog and strong demand throughout the quarter. Despite continued challenges of inflation and supply chain volatility, we delivered record third quarter earnings per share as our team continues to live our core values of passion, integrity, and continuous improvement, with an unwavering focus on delivering results. Across our global portfolio we remain committed to the execution of our growth strategy while also improving profitability and delivering long-term value for our shareholders.”
Third Quarter 2022 Segment Review
Infrastructure (70.5% of Net Sales)
Products and solutions to serve the infrastructure markets of utility, renewable energy, lighting, transportation and telecommunications, and coatings services to preserve metal products
Sales of $778.4 million grew 22.7% year-over-year with double-digit sales growth across all product lines, net of 2.3% unfavorable foreign currency translation impacts. 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, higher volumes, notably in the Renewable Energy product line, and sales from the ConcealFab acquisition.
Operating Income improved to $93.6 million or 12.1% of net sales compared to $71.4 million or 11.3% in 2021, driven by favorable pricing and higher volumes.
^1^ Please see Reg G reconciliation to GAAP measures at end of document
Agriculture (29.5% 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 $327.3 million increased 36.2% year-over-year, with sales growth across North America and International markets, led by higher average selling prices of irrigation equipment and higher volumes, partially offset by lower project sales to Egypt. In Brazil, sales nearly doubled year-over-year, demonstrating continued robust market demand for irrigation equipment and ag solar products.
Operating Income improved to $43.3 million, or 13.3% of net sales ($47.4 million or 14.6% adjusted^1^) compared to $27.7 million or 11.7% of net sales ($32.0 million or 13.5% adjusted^1^) 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.
Balance Sheet, Liquidity and Capital Allocation
The Company generated year-to-date operating cash flows of $184 million through strong earnings and managing working capital while supporting strong revenue growth. At the end of the third quarter, cash and cash equivalents were $166 million. Valmont purchased approximately $11 million of company stock in the third quarter and approximately $101 million remains on the current authorization with no expiration.
Updating Full Year 2022 Financial Outlook and Key Assumptions and Providing 2023 Indications
The Company is updating its 2022 full-year net sales and diluted earnings per share outlook that were communicated last quarter and providing updated key assumptions for the year.
| | | | |
|---|---|---|---|
| 2022 Full Year Financial Outlook | | Previous Outlook | Revised Outlook |
| Net Sales Growth (vs. PY) | | 20% to 21% | ~ 22% |
| GAAP Diluted EPS^1^ | | $12.90 to $13.30 | $12.95 to $13.30 |
| Adjusted Diluted EPS^1^ | | $13.60 to $14.00 | $13.65 to $14.00 |
| Tax Rate | | ~ 27.5% | ~ 27.5% |
| FX Translation Impact on Net Sales | | ~ (2.0%) | ~ (2.0%) |
| Capital Expenditures | | $110 to $120 million | $95 to $105 million |
| ● | Revised net sales growth to reflect third quarter 2022 results |
|---|---|
| ● | Revised Diluted EPS to reflect expected mix of earnings and timing of project deliveries |
| --- | --- |
| ● | Capital expenditures now expected to be in the range of $95 - $105 million due to extended machinery lead times |
| --- | --- |
| ● | Providing indicative guidance for 2023 of net sales growth in the range of 6% to 9% and diluted EPS growth in the range of 11% to 15% |
| --- | --- |
Kaniewski continued, “The strong market drivers we are seeing across our businesses, our continued track record of execution and a record backlog of ~$2 billion, give us confidence going forward. The long-term need for critical infrastructure investment globally, including current and future stimulus programs, are driving sustainable demand across our Infrastructure businesses. Favorable agriculture market trends across global markets and a strong international project pipeline are providing momentum for our Agriculture business well into next year.”
Added Kaniewski, "Looking ahead to 2023, we believe favorable market conditions and strong demand will continue, and our robust backlog and ongoing pricing strategies across the portfolio give us confidence in revenue and profitability growth next year. In 2023, we expect sales growth of 6% to 9% and earnings per share growth of 11% to 15%. Through our diversified business portfolio, return on invested capital focus, and ^1^ Please see Reg G reconciliation to GAAP measures at end of document
organizational emphasis on ESG principles, we are in a position of strength with a talented team who are driven by our core values to deliver results for our customers and our stakeholders. We remain focused on what we can control: leveraging our business model and Valmont team to deliver innovative products and solutions to our customers, advancing operational excellence, and executing on strategic initiatives that drive sustainable, profitable growth. Additionally, our balance sheet remains strong, giving us flexibility to execute our long-term strategic plan.”
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 27, 2022 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 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 three hours after the call at the above link or by telephone at 1-877-660-6853 or 1-201-612-7415. Please use access code 13733566. The replay will be available through 10:59 p.m. CDT on November 03, 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 the pandemic 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)
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Third Quarter | | Year-to-Date | ||||||||
| | | 13 Weeks Ended | | 39 Weeks Ended | ||||||||
| | | 09/24/2022 | **** | 09/25/2021 | **** | 09/24/2022 | **** | 09/25/2021 | ||||
| Net sales | | $ | 1,097,382 | | $ | 868,782 | | $ | 3,213,734 | | $ | 2,538,297 |
| Cost of sales | | | 811,904 | | | 641,378 | | | 2,386,469 | | | 1,876,692 |
| Gross profit | | | 285,478 | | | 227,404 | | | 827,265 | | | 661,605 |
| Selling, general and administrative expenses | | | 175,506 | | | 151,209 | | | 503,732 | | | 425,574 |
| Operating income | | | 109,972 | | | 76,195 | | | 323,533 | | | 236,031 |
| Other income (expense) | | | | | | | | | ||||
| Interest expense | | | (11,629) | | | (11,031) | | | (34,278) | | | (31,466) |
| Interest income | | | 507 | | | 397 | | | 1,019 | | | 894 |
| Gain (loss) on investments (unrealized) | | | (901) | | | 488 | | | (4,306) | | | 1,556 |
| Other | | | 2,822 | | | 2,644 | | | 8,537 | | | 10,297 |
| Other income (expense), net | | | (9,201) | | | (7,502) | | | (29,028) | | | (18,719) |
| Earnings before income taxes | | | 100,771 | | | 68,693 | | | 294,505 | | | 217,312 |
| Income tax expense | | | 27,823 | | | 16,080 | | | 80,531 | | | 46,322 |
| Equity in loss of nonconsolidated subsidiaries | | | (18) | | | (360) | | | (931) | | | (1,079) |
| Net earnings | | | 72,930 | | | 52,253 | | | 213,043 | | | 169,911 |
| Less: earnings attributable to non-controlling interests | | | (818) | | | (603) | | | (2,512) | | | (1,137) |
| Net earnings attributable to Valmont Industries, Inc. | | $ | 72,112 | | $ | 51,650 | | $ | 210,531 | | $ | 168,774 |
| | | | | | | | | | | | | |
| Average shares outstanding (000's) - Basic | | | 21,332 | | | 21,175 | | | 21,308 | | | 21,182 |
| Earnings per share - Basic | | $ | 3.38 | | $ | 2.44 | | $ | 9.88 | | $ | 7.97 |
| | | | | | | | | | | | | |
| Average shares outstanding (000's) - Diluted | | | 21,605 | | | 21,552 | | | 21,546 | | | 21,483 |
| Earnings per share - Diluted | | $ | 3.34 | | $ | 2.40 | | $ | 9.77 | | $ | 7.86 |
| | | | | | | | | | | | | |
| Cash dividends per share | | $ | 0.55 | | $ | 0.50 | | $ | 1.65 | | $ | 1.50 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | Third Quarter | | | Year-to-Date | ||||||
| | | 13 Weeks Ended | | 39 Weeks Ended | ||||||||
| | | 09/24/2022 | **** | 09/25/2021 | **** | 09/24/2022 | **** | 09/25/2021 | ||||
| Net sales | | | | | | | | | | | | |
| Infrastructure | | $ | 778,353 | | $ | 634,283 | | $ | 2,224,029 | | $ | 1,801,533 |
| Agriculture | | | 327,261 | | | 240,331 | | | 1,011,606 | | | 751,960 |
| Total | | | 1,105,614 | | | 874,614 | | | 3,235,635 | | | 2,553,493 |
| Less: Intersegment sales | | | (8,232) | | | (5,832) | | | (21,901) | | | (15,196) |
| Total | | $ | 1,097,382 | | $ | 868,782 | | $ | 3,213,734 | | $ | 2,538,297 |
| | | | | | | | | | | | | |
| Operating Income | | | | | | | | | ||||
| Infrastructure | | $ | 93,572 | | $ | 71,422 | | $ | 255,722 | | $ | 187,421 |
| Agriculture | | | 43,258 | | | 27,735 | | | 138,779 | | | 108,467 |
| Corporate | | | (26,858) | | | (22,962) | | | (70,968) | | | (59,857) |
| Total | | $ | 109,972 | | $ | 76,195 | | $ | 323,533 | | $ | 236,031 |
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 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 September 24, 2022 | ||||||||||
| | | | | | | | | Intersegment | | | | |
| | **** | Infrastructure | **** | Agriculture | **** | Sales | **** | Consolidated | ||||
| Geographical market: | | | | | | | | | | | | |
| North America | | $ | 579,628 | | $ | 178,626 | | $ | (7,114) | | $ | 751,140 |
| International | | | 198,725 | | | 148,635 | | | (1,118) | | | 346,242 |
| Total | | $ | 778,353 | | $ | 327,261 | | $ | (8,232) | | $ | 1,097,382 |
| | | | | | | | | | | | | |
| Product line: | | | | | | | | | ||||
| Transmission, Distribution and Substation | | $ | 304,781 | | $ | — | | $ | — | | $ | 304,781 |
| Lighting and Transportation | | | 241,590 | | | — | | | — | | | 241,590 |
| Coatings | | | 91,969 | | | — | | | (3,994) | | | 87,975 |
| Telecommunications | | | 92,830 | | | — | | | — | | | 92,830 |
| Renewable Energy | | | 47,183 | | | — | | | (1,118) | | | 46,065 |
| Irrigation Equipment and Parts, | | | | | | | | | | | | |
| excluding Technology | | | — | | | 303,003 | | | (3,120) | | | 299,883 |
| Technology Products and Services | | | — | | | 24,258 | | | — | | | 24,258 |
| Total | | $ | 778,353 | | $ | 327,261 | | $ | (8,232) | | $ | 1,097,382 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirteen weeks ended September 25, 2021 | ||||||||||
| | | | | | | | | Intersegment | | | | |
| | **** | Infrastructure | **** | Agriculture | **** | Sales | **** | Consolidated | ||||
| Geographical market: | | | | | | | | | | | | |
| North America | | $ | 439,610 | | $ | 116,308 | | $ | (5,832) | | $ | 550,086 |
| International | | | 194,673 | | | 124,023 | | | — | | | 318,696 |
| Total | | $ | 634,283 | | $ | 240,331 | | $ | (5,832) | | $ | 868,782 |
| | | | | | | | | | | | | |
| Product line: | | | | | | | | | | | | |
| Transmission, Distribution and Substation | | $ | 239,572 | | $ | — | | $ | — | | $ | 239,572 |
| Lighting and Transportation | | | 217,962 | | | — | | | — | | | 217,962 |
| Coatings | | | 76,761 | | | — | | | (1,826) | | | 74,935 |
| Telecommunications | | | 63,088 | | | — | | | — | | | 63,088 |
| Renewable Energy | | | 36,900 | | | — | | | — | | | 36,900 |
| Irrigation Equipment and Parts, | | | | | | | | | | | | |
| excluding Technology | | | — | | | 218,892 | | | (4,006) | | | 214,886 |
| Technology Products and Services | | | — | | | 21,439 | | | — | | | 21,439 |
| Total | | $ | 634,283 | | $ | 240,331 | | $ | (5,832) | | $ | 868,782 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirty-nine weeks ended September 24, 2022 | ||||||||||
| | | | | | | | | Intersegment | | | | |
| | **** | Infrastructure | **** | Agriculture | **** | Sales | **** | Consolidated | ||||
| Geographical market: | | | | | | | | | | | | |
| North America | | $ | 1,645,472 | | $ | 564,369 | | $ | (20,316) | | $ | 2,189,525 |
| International | | | 578,557 | | | 447,237 | | | (1,585) | | | 1,024,209 |
| Total | | $ | 2,224,029 | | $ | 1,011,606 | | $ | (21,901) | | $ | 3,213,734 |
| | | | | | | | | | | | | |
| Product line: | | | | | | | | | | | | |
| Transmission, Distribution and Substation | | $ | 882,216 | | $ | — | | $ | — | | $ | 882,216 |
| Lighting and Transportation | | | 701,009 | | | — | | | — | | | 701,009 |
| Coatings | | | 264,266 | | | — | | | (11,295) | | | 252,971 |
| Telecommunications | | | 232,765 | | | — | | | — | | | 232,765 |
| Renewable Energy | | | 143,773 | | | — | | | (1,118) | | | 142,655 |
| Irrigation Equipment and Parts, | | | | | | | | | | | | |
| excluding Technology | | | — | | | 928,622 | | | (9,488) | | | 919,134 |
| Technology Products and Services | | | — | | | 82,984 | | | — | | | 82,984 |
| Total | | $ | 2,224,029 | | $ | 1,011,606 | | $ | (21,901) | | $ | 3,213,734 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirty-nine weeks ended September 25, 2021 | ||||||||||
| | | | | | | | | Intersegment | | | | |
| | **** | Infrastructure | **** | Agriculture | **** | Sales | **** | Consolidated | ||||
| Geographical market: | | | | | | | | | | | | |
| North America | | $ | 1,246,512 | | $ | 395,096 | | $ | (15,196) | | $ | 1,626,412 |
| International | | | 555,021 | | | 356,864 | | | — | | | 911,885 |
| Total | | $ | 1,801,533 | | $ | 751,960 | | $ | (15,196) | | $ | 2,538,297 |
| | | | | | | | | | | | | |
| Product line: | | | | | | | | | | |||
| Transmission, Distribution and Substation | | $ | 668,474 | | $ | — | | $ | — | | $ | 668,474 |
| Lighting and Transportation | | | 609,725 | | | — | | | — | | | 609,725 |
| Coatings | | | 231,900 | | | — | | | (7,823) | | | 224,077 |
| Telecommunications | | | 162,830 | | | — | | | — | | | 162,830 |
| Renewable Energy | | | 128,604 | | | — | | | — | | | 128,604 |
| Irrigation Equipment and Parts, | | | | | | | | | | | | |
| excluding Technology | | | — | | | 679,600 | | | (7,373) | | | 672,227 |
| Technology Products and Services | | | — | | | 72,360 | | | — | | | 72,360 |
| Total | | $ | 1,801,533 | | $ | 751,960 | | $ | (15,196) | | $ | 2,538,297 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
| | | | | | | |
|---|---|---|---|---|---|---|
| | | 09/24/2022 | **** | 12/25/2021 | ||
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 166,221 | | $ | 177,232 |
| Accounts receivable, net | | | 614,411 | | | 571,593 |
| Inventories | | | 746,282 | | | 728,834 |
| Contract asset - costs and profits in excess of billings | | | 215,684 | | | 142,643 |
| Prepaid expenses and other assets | | | 107,476 | | | 83,646 |
| Refundable income taxes | | | — | | | 8,815 |
| Total current assets | | | 1,850,074 | | | 1,712,763 |
| Property, plant and equipment, net | | | 596,850 | | | 598,605 |
| Goodwill and other assets | | | 1,174,805 | | | 1,135,881 |
| | | $ | 3,621,729 | | $ | 3,447,249 |
| | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | ||
| Current liabilities: | | | | | ||
| Current installments of long-term debt | | $ | 2,106 | | $ | 4,884 |
| Notes payable to banks | | | 4,935 | | | 13,439 |
| Accounts payable | | | 376,508 | | | 347,841 |
| Accrued expenses | | | 261,900 | | | 253,330 |
| Contract liability - billings in excess of costs and earnings | | | 200,341 | | | 135,746 |
| Income taxes payable | | | 10,668 | | | — |
| Dividend payable | | | 11,733 | | | 10,616 |
| Total current liabilities | | | 868,191 | | | 765,856 |
| Long-term debt, excluding current installments | | | 935,129 | | | 947,072 |
| Operating lease liabilities | | | 156,860 | | | 147,759 |
| Other long-term liabilities | | | 88,798 | | | 172,965 |
| Shareholders' equity | | | 1,572,751 | | | 1,413,597 |
| | | $ | 3,621,729 | | $ | 3,447,249 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| | | | | | | |
|---|---|---|---|---|---|---|
| | | 39 Weeks Ended | ||||
| | | 09/24/2022 | **** | 09/25/2021 | ||
| Cash flows from operating activities | | | | | | |
| Net Earnings | | $ | 213,043 | | $ | 169,911 |
| Depreciation and amortization | | | 72,803 | | | 67,764 |
| Contribution to defined benefit pension plan | | | (17,155) | | | (970) |
| Change in working capital | | | (96,995) | | | (183,030) |
| Other | | | 12,030 | | | 8,154 |
| Net cash flows from operating activities | | | 183,726 | | | 61,829 |
| | | | | | | |
| Cash flows from investing activities | | | | | ||
| Purchase of property, plant, and equipment | | | (67,122) | | | (80,509) |
| Acquisitions | | | (39,287) | | | (312,500) |
| Other | | | (37) | | | 3,546 |
| Net cash flows from investing activities | | | (106,446) | | | (389,463) |
| | | | | | | |
| Cash flows from financing activities | | | | | ||
| Proceeds from long-term borrowings | | | 235,470 | | | 236,710 |
| Principal payments on long-term borrowings | | | (251,155) | | | (66,128) |
| Net payments on short-term borrowings | | | (8,229) | | | (20,463) |
| Purchase of treasury shares | | | (20,491) | | | (24,101) |
| Purchase of noncontrolling interest | | | (7,338) | | | — |
| Dividends paid | | | (34,080) | | | (30,794) |
| Other | | | 6,680 | | | 5,792 |
| Net cash flows from financing activities | | | (79,143) | | | 101,016 |
| Effect of exchange rates on cash and cash equivalents | | | (9,148) | | | (4,313) |
| Net change in cash and cash equivalents | | | (11,011) | | | (230,931) |
| Cash and cash equivalents - beginning of year | | | 177,232 | | | 400,726 |
| Cash and cash equivalents - end of period | | $ | 166,221 | | $ | 169,795 |
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 and 2021 results. We believe the adjustments for Prospera allow for a better investor understanding of Agriculture segment performance related to traditional segment products. 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 | | Diluted | | Thirty-nine | | Diluted | ||||
| | | weeks ended | | earnings per | | weeks ended | | earnings per | ||||
| | | September 24, 2022 | | share | | September 24, 2022 | | share | ||||
| Net earnings attributable to Valmont Industries, Inc. - as reported | | $ | 72,112 | | $ | 3.34 | | $ | 210,531 | | $ | 9.77 |
| Prospera intangible asset amortization | | | 1,645 | | | 0.08 | | | 4,935 | | | 0.23 |
| Stock-based compensation - Prospera | | | 2,530 | | | 0.12 | | | 7,523 | | | 0.35 |
| Total Adjustments, pre-tax^1^ | | | 4,175 | | | 0.19 | | | 12,458 | | | 0.58 |
| Tax effect of adjustments^2^ | | | (974) | | | (0.05) | | | (2,106) | | | (0.10) |
| Net earnings attributable to Valmont Industries, Inc. - Adjusted^1^ | | $ | 75,313 | | $ | 3.49 | | $ | 220,883 | | $ | 10.25 |
| Average shares outstanding (000’s) - Diluted | | | | | | 21,605 | | | | | 21,546 |
| | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirteen | | Diluted | | Thirty-nine | | Diluted | ||||
| | | weeks ended | | earnings per | | weeks ended | | earnings per | ||||
| | | September 25, 2021 | | share | | September 25, 2021 | | 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 | | | 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, pre-tax^1^ | | | 4,238 | | | 0.20 | | | 12,463 | | | 0.58 |
| Change in U.K. statutory tax rate | | | — | | | — | | | (2,819) | | | (0.13) |
| Tax effect of adjustments^2^ | | | (604) | | | (0.03) | | | (2,358) | | | (0.11) |
| Net earnings attributable to Valmont Industries, Inc. - Adjusted^1^ | | $ | 55,284 | | $ | 2.57 | | $ | 176,060 | | $ | 8.20 |
| Average shares outstanding (000’s) - Diluted | | | | | | 21,552 | | | | | 21,483 |
^1^Earnings per share includes rounding
^2^The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirteen weeks ended September 24, 2022 | | ||||||||||
| Operating Income Reconciliation | | Infrastructure | Agriculture | Corporate | Valmont | ||||||||
| Operating income - as reported | | $ | 93,572 | | $ | 43,258 | | $ | (26,858) | | $ | 109,972 | |
| Stock-based compensation - Prospera | | | — | | | 2,530 | | | — | | | 2,530 | |
| Prospera intangible asset amortization | | | — | | | 1,645 | | | — | | | 1,645 | |
| Adjusted Operating Income | | $ | 93,572 | | $ | 47,433 | | $ | (26,858) | | $ | 114,147 | |
| Net Sales - as reported | | | 773,241 | | | 324,141 | | | NM | | | 1,097,382 | |
| | | | | | | | | | | | | | |
| Operating Income as a % of Net Sales | | | 12.1 | % | | 13.3 | % | | NM | | | 10.0 | % |
| Adjusted Operating Income as a % of Net Sales | | | 12.1 | % | | 14.6 | % | | NM | | | 10.4 | % |
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirteen weeks ended September 25, 2021 | | ||||||||||
| Operating Income Reconciliation | | Infrastructure | Agriculture | Corporate | Valmont | ||||||||
| Operating income - as reported | | $ | 71,422 | | $ | 27,735 | | $ | (22,962) | | $ | 76,195 | |
| Prospera intangible asset amortization | | | — | | | 1,926 | | | — | | | 1,926 | |
| Stock-based compensation - Prospera | | | — | | | 2,312 | | | — | | | 2,312 | |
| Adjusted Operating Income | | $ | 71,422 | | $ | 31,973 | | $ | (22,962) | | $ | 80,433 | |
| Net Sales - as reported | | | 632,457 | | | 236,325 | | | NM | | | 868,782 | |
| | | | | | | | | | | | | | |
| Operating Income as a % of Net Sales | | | 11.3 | % | | 11.7 | % | | NM | | | 8.8 | % |
| Adjusted Operating Income as a % of Net Sales | | | 11.3 | % | | 13.5 | % | | NM | | | 9.3 | % |
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirty-nine weeks ended September 24, 2022 | | ||||||||||
| Operating Income Reconciliation | | Infrastructure | Agriculture | Corporate | Valmont | ||||||||
| Operating income - as reported | | $ | 255,722 | | $ | 138,779 | | $ | (70,968) | | $ | 323,533 | |
| Stock-based compensation - Prospera | | | — | | | 7,523 | | | — | | | 7,523 | |
| Prospera intangible asset amortization | | | — | | | 4,935 | | | — | | | 4,935 | |
| Adjusted Operating Income | | $ | 255,722 | | $ | 151,237 | | $ | (70,968) | | $ | 335,991 | |
| Net Sales - as reported | | | 2,211,616 | | | 1,002,118 | | | NM | | | 3,213,734 | |
| | | | | | | | | | | | | | |
| Operating Income as a % of Net Sales | | | 11.6 | % | | 13.8 | % | | NM | | | 10.1 | % |
| Adjusted Operating Income as a % of Net Sales | | | 11.6 | % | | 15.1 | % | | NM | | | 10.5 | % |
| | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirty-nine weeks ended September 25, 2021 | | ||||||||||
| Operating Income Reconciliation | | Infrastructure | Agriculture | Corporate | Valmont | ||||||||
| Operating income - as reported | | $ | 187,421 | | $ | 108,467 | | $ | (59,857) | | $ | 236,031 | |
| Prospera intangible asset amortization | | | — | | | 1,926 | | | — | | | 1,926 | |
| Stock-based compensation - Prospera | | | — | | | 2,312 | | | — | | | 2,312 | |
| 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 | | $ | 193,616 | | $ | 113,615 | | $ | (58,737) | | $ | 248,494 | |
| Net Sales - as reported | | | 1,793,710 | | | 744,587 | | | NM | | | 2,538,297 | |
| | | | | | | | | | | | | | |
| Operating Income as a % of Net Sales | | | 10.4 | % | | 14.6 | % | | NM | | | 9.3 | % |
| Adjusted Operating Income as a % of Net Sales | | | 10.8 | % | | 15.3 | % | | NM | | | 9.8 | % |
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 investor understanding of Agriculture segment performance related to traditional segment products. 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 | | $ | 279,500 | | $ | 287,200 | | | |
| Prospera intangible asset (proprietary technology) amortization, pre-tax | | | | | | | | | 6,700 |
| Stock-based compensation - Prospera, pre-tax | | | | | | | | | 10,000 |
| Total pre-tax adjustments | | | | | | | | | 16,700 |
| Estimated tax benefit from above expenses* | | | | | | | | (2,500) | |
| | | | | | | | | | |
| Total Adjustments, after-tax | | | | | | | $ | 14,200 | |
| Estimated net earnings - Adjusted | | $ | 293,700 | | $ | 301,400 | | | |
| Diluted Earnings Per Share Range - GAAP | | $ | 12.95 | | $ | 13.30 | | | |
| Diluted Earnings Per Share Range - Adjusted | | $ | 13.65 | | $ | 14.00 | | |
* The tax effect of adjustments is calculated based on the estimated income tax rate in each applicable jurisdiction.
Exhibit 99.2
| © 2022 Valmont<br>®<br>Industries, Inc.<br>Valmont Industries, Inc.<br>Third Quarter 2022<br>Earnings Presentation<br>October 27, 2022 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Disclosure Regarding Forward<br>-<br>Looking Statements<br>These slides contain (and the accompanying oral discussion will contain) “forward<br>-<br>looking statements” within the meaning of the<br>Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other fa<br>cto<br>rs<br>that could cause the actual results of the Company to differ materially from the results expressed or implied by such stateme<br>nts<br>,<br>including general economic and business conditions, conditions affecting the industries served by the Company and its subsidi<br>ari<br>es<br>including the continuing and developing effects of the pandemic including the effects of the outbreak on the general economy<br>and<br>the specific economic responses to the Company’s products and services, the overall market acceptance of such products and<br>services, the integration of acquisitions and other factors disclosed in the Company’s periodic reports filed with the Securi<br>tie<br>s and<br>Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and<br>financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new<br>pr<br>oducts,<br>product pricing, domestic and international competitive environments, geopolitical risks and actions and policy changes of do<br>mes<br>tic<br>and foreign governments. Consequently, such forward<br>-<br>looking statements should be regarded as the Company’s current plans,<br>estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the result<br>s o<br>f<br>any revisions to these forward<br>-<br>looking statements that may be made to reflect any future events or circumstances after the date<br>of<br>such statements or to reflect the occurrence of anticipated or unanticipated events.<br>October 27, 2022<br> | Valmont Industries, Inc.<br>2 | ||||||||||||||
| --- | |||||||||||||||
| STEVE<br>KANIEWSKI<br>PRESIDENT & CHIEF EXECUTIVE OFFICER<br>October 27, 2022<br> | Valmont Industries, Inc.<br>3 | ||||||||||||||
| --- | |||||||||||||||
| 3Q 2022 Summary<br>October 27, 2022<br> | Valmont Industries, Inc.<br>4<br>•<br>Record sales as strong broad<br>-<br>based demand drove higher volumes despite macroeconomic volatility<br>•<br>Disciplined pricing strategy to capture delivered value and offset inflation<br>•<br>Record global backlog of $2.0 billion, reflecting strong market demand<br>•<br>Delivering differentiated, sustainable solutions to our customers<br>TOTAL 3Q 2022 SALES<br>$1,097.4M; +26% Y/Y<br>AGRICULTURE<br>$327.3M; +36% Y/Y<br>30% of Sales<br>•<br>Market fundamentals and farmer sentiment driving robust project<br>pipeline, most notably in Middle East and Africa<br>•<br>Pressure on crop yields and expected stock levels due to persistent<br>drought conditions, keeping global commodity prices elevated<br>•<br>Typical 3Q seasonality less pronounced as we delivered 2Q backlog<br>INFRASTRUCTURE<br>$778.4M; +23% Y/Y<br>70% of Sales<br>•<br>Led by strong underlying demand across global markets for all product lines,<br>with favorable pricing most notably TD&S, L&T and Telecommunications<br>•<br>Continued investments in grid resilience, clean energy solutions, upgrading<br>infrastructure and 5G rollouts<br>•<br>Expect future benefits from Infrastructure Investment and Jobs Act (IIJA)<br>and Inflation Reduction Act | ||||||||||||||
| --- | |||||||||||||||
| Strategic Pillars Enable Sustainable Business Outcomes<br>October 27, 2022<br> | Valmont Industries, Inc.<br>5<br>Our Strategic Approach is Contributing to Shareholder Value<br>BUILDING A MORE RESILIENT BUSINESS<br>•<br>Focused on high<br>-<br>growth and diverse end markets with<br>favorable long<br>-<br>term demand trends<br>•<br>Targeted investments in innovation that contribute to<br>sustainability goals<br>•<br>Organic growth and strategic acquisitions<br>•<br>Ag Tech sales<br>•<br>ConcealFab<br>acquisition<br>Optimizing Talent and Technology<br>Accelerating Innovation<br>Elevating ESG<br>Operational Excellence with ESG Focus<br>Accelerating Growth<br>Expanding Markets that We Serve<br>EXECUTING OUR THREE STRATEGIC PILLARS | ||||||||||||||
| --- | |||||||||||||||
| Strategically Growing our Solar Market Presence<br>October 27, 2022<br> | Valmont Industries, Inc.<br>6<br>Increased Renewable Energy Demand is Catapulting Solar Growth<br>VALMONT<br>SOLAR<br>AG<br>SOLAR<br>•<br>2018<br>-<br>Convert Italia acquisition<br>•<br>Focus on distributed generation projects<br>•<br>Key international markets have more pronounced barriers to entry<br>and favorable legislation<br>•<br>Targeting additional growth in domestic U.S. market<br>•<br>Strong competitive advantages<br>•<br>Expect ~$120M in 2022 sales<br>•<br>2020<br>-<br>Solbras majority stake acquisition<br>•<br>Integrated with our world<br>-<br>class Valley dealer network<br>•<br>Became the sole global player in this underserved market<br>•<br>Partner of choice due to unparalleled service and support<br>•<br>Expect to exceed $100M in sales by the end of 2022 | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>7<br>AVNER APPLBAUM<br>EVP & CHIEF FINANCIAL OFFICER | ||||||||||||||
| --- | |||||||||||||||
| 3Q 2022 Financial Summary<br>October 27, 2022<br> | Valmont Industries, Inc.<br>8<br>8<br>1<br>Please<br>see Reg G reconciliation to GAAP measures at end of document.<br>•<br>Mid<br>-<br>single digit volume growth on strong demand across the portfolio and a relentless focus on price management; 8<br>th<br>consecutive<br>quarter of double<br>-<br>digit Y/Y sales growth<br>•<br>Operating margin improved to 10.0% (10.4% adjusted<br>1<br>) reflecting higher volumes, improved fixed<br>-<br>cost leverage and execution of<br>pricing strategy<br>•<br>EPS growth driven by higher operating income, partially offset by higher tax expense due to changes in the geographic mix<br>of earnings<br>SALES ($M)<br>+26.3%<br>$868.8<br>$1,097.4<br>2021<br>2022<br>OPERATING INCOME ($M)<br>GAAP<br>Adjusted<br>1<br>+44.3%<br>+41.9%<br>$76.2<br>$110.0<br>$80.4<br>$114.1<br>2021<br>2022<br>2021<br>2022<br>$2.40<br>$3.34<br>$2.57<br>$3.49<br>2021<br>2022<br>2021<br>2022<br>DILUTED EPS<br>GAAP<br>Adjusted<br>1<br>+39.2%<br>+35.8% | ||||||||||||||
| --- | |||||||||||||||
| 3Q 2022 Results | Infrastructure<br>October 27, 2022<br> | Valmont Industries, Inc.<br>9<br>9<br>•<br>Double<br>-<br>digit s<br>ales growth across all product lines, net of 2.3% FX headwind, on strong demand<br>and favorable<br>pricing globally,<br>primarily in TD&S, L&T, and Telecommunications<br>•<br>Volume growth, notably in the Renewable Energy product line and contribution from ConcealFab acquisition<br>•<br>Operating margin improved 80 bps to 12.1%, due to favorable pricing and improved fixed<br>-<br>cost leverage<br>SALES ($M)<br>2021<br>2022<br>%<br>Transmission,<br>Distribution and<br>Substation (TD&S)<br>$ 239.6<br>$ 304.8<br>+27%<br>Lighting and<br>Transportation (L&T)<br>218.0<br>241.6<br>+11%<br>Coatings<br>76.8<br>92.0<br>+20%<br>Telecommunications<br>63.1<br>92.8<br>+47%<br>Renewable Energy<br>36.9<br>47.2<br>+28%<br>$634.3<br>$778.4<br>2021<br>2022<br>$71.4<br>$93.6<br>2021<br>2022<br>SALES ($M)<br>+22.7%<br>OPERATING INCOME ($M)<br>+31.0% | |||||||||||||
| --- | |||||||||||||||
| 3Q 2022 Results | Agriculture<br>October 27, 2022<br> | Valmont Industries, Inc.<br>10<br>10<br>1<br>Please<br>see Reg G reconciliation to GAAP measures at end of document.<br>2<br>Technology sales are reported as a subset of total Agriculture segment sales<br>$240.3<br>$327.3<br>2021<br>2022<br>SALES ($M)<br>2021<br>2022<br>%<br>North American<br>Irrigation<br>$ 116.3<br>$ 178.6<br>+54%<br>International<br>Irrigation<br>124.0<br>148.6<br>+20%<br>Agricultural<br>Technology<br>2<br>21.4<br>24.3<br>+13%<br>$27.7<br>$43.3<br>$32.0<br>$47.4<br>2021<br>2022<br>2021<br>2022<br>SALES ($M)<br>+36.2%<br>OPERATING INCOME ($M)<br>GAAP<br>Adjusted<br>1<br>+56.0%<br>+48.4%<br>•<br>Sales increased due to higher average selling prices of irrigation equipment globally<br>and<br>higher volumes, partially offset by lower<br>project sales to Egypt<br>•<br>Brazil<br>sales grew ~$<br>40<br>M<br>Y/<br>Y<br>due to ongoing, robust demand in the country for irrigation and ag solar solutions<br>•<br>Operating margins increased due to the<br>benefit of higher average selling prices and additional volume leverage, partially offset by<br>higher SG&A, including incremental R&D expense for technology investments | |||||||||||||
| --- | |||||||||||||||
| YTD Cash Flow Highlights<br>October 27, 2022<br> | Valmont Industries, Inc.<br>11<br>($M)<br>YTD 9/24/2022<br>Net Cash Flows from Operating Activities<br>$<br>184<br>Net Cash Flows from Investing Activities<br>(106)<br>Net Cash Flows from Financing Activities<br>(79)<br>Net Cash Flows from Operating Activities<br>$<br>184<br>Purchase of Property, Plant & Equipment<br>(67)<br>Free Cash Flows<br>$<br>117<br>FCF Improvement Driven By Diligent Working Capital Management | ||||||||||||||
| --- | |||||||||||||||
| Balanced Approach to Capital Allocation<br>October 27, 2022<br> | Valmont Industries, Inc.<br>12<br>12<br>GROWING OUR BUSINESS<br>RETURNING CASH TO SHAREHOLDERS<br>•<br>Now expect FY2022 CapEx<br>of $95<br>-<br>$105M due to<br>extended machinery lead<br>times<br>•<br>Investments to support<br>strategic growth initiatives<br>and Industry 4.0 advanced<br>manufacturing<br>•<br>Acquired ConcealFab to expand<br>5G infrastructure presence; will<br>be accretive in year one<br>•<br>Targeting high growth<br>opportunities in end markets with<br>favorable and global long<br>-<br>term<br>demand trends<br>•<br>Returns exceeding cost of<br>capital within 3 years<br>•<br>Opportunistic approach,<br>supported by free cash flow<br>•<br>~$101M remains on current<br>authorization<br>•<br>10% dividend increase announced<br>February 2022<br>•<br>Payout ratio target: 22% of earnings<br>•<br>Current payout: ~16%<br>2022 YTD Capital Deployment: $161M<br>$67M<br>Capital Expenditures<br>$39M<br>Acquisitions<br>$20M<br>Share Repurchases<br>$34M<br>Dividends | ||||||||||||||
| --- | |||||||||||||||
| Strong Balance Sheet and Liquidity<br>October 27, 2022<br> | Valmont Industries, Inc.<br>13<br>13<br>Cash<br>$166M<br>Total Long<br>-<br>Term Debt<br>$935M<br>Shareholders’ Equity<br>$1,573M<br>Total Debt to Adj. EBITDA<br>1<br>1.5x<br>Available<br>Credit under<br>Revolving Credit Facility<br>2<br>$595M<br>Cash<br>$166M<br>Total Available Liquidity<br>$761M<br>As of September 24, 2022<br>►<br>Long<br>-<br>term debt<br>mostly fixed<br>-<br>rate, with long<br>-<br>dated maturities to 2044 and 2054<br>►<br>Total Debt to Adjusted EBITDA remains within our<br>desired range of 1.5 to 2.5 times<br>►<br>Capital allocation strategy has not changed,<br>focused on<br>strategically supporting business growth<br>1<br>See slide 33 for calculation of Adjusted EBITDA and Leverage Ratio.<br>2<br>$800M Total Revolver less borrowings and Standby LC’s of $205M. | ||||||||||||||
| --- | |||||||||||||||
| Full Year 2022 Outlook and Key Assumptions<br>October 27, 2022<br> | Valmont Industries, Inc.<br>14<br>14<br>KEY ASSUMPTIONS<br>•<br>Revised net sales growth is primarily to reflect third quarter<br>results<br>•<br>Revised Diluted EPS to reflect expected mix of earnings and<br>timing of project deliveries<br>•<br>Expect full<br>-<br>year mid<br>-<br>single digit volume growth<br>•<br>Expect an unfavorable foreign currency translation impact of<br>~2.0% of net sales vs prior year<br>•<br>Expect a full year tax rate of ~27.5% due to the expected mix<br>of earnings<br>•<br>Expect capital expenditures to be in the range of $95<br>-<br>$105<br>million due to extended machinery lead times<br>1<br>Exclusive of potential future restructuring activities.<br>2<br>Please see Reg G reconciliation to GAAP measures at end of document.<br>PREVIOUS<br>2022 OUTLOOK<br>1<br>20%<br>–<br>21%<br>Increase in Net Sales Y/Y<br>~ (2.0%)<br>FX Translation Net Sales Impact<br>$13.60<br>–<br>$14.00<br>Adj. Diluted EPS<br>2<br>$12.90<br>–<br>$13.30<br>GAAP Diluted EPS<br>~27.5%<br>Tax Rate<br>~ $4.2B<br>Net Sales<br>CURRENT<br>2022 OUTLOOK<br>1<br>22%<br>Increase in Net Sales Y/Y<br>~ (2.0%)<br>FX Translation Net Sales Impact<br>$13.65<br>–<br>$14.00<br>Adj. Diluted EPS<br>2<br>$12.95<br>–<br>$13.30<br>GAAP Diluted EPS<br>~27.5%<br>Tax Rate<br>~ $4.3B<br>Net Sales<br>$110 to $120 million<br>Capital Expenditures<br>$95 to $105 million<br>Capital Expenditures | ||||||||||||||
| --- | |||||||||||||||
| Preliminary 2023 Outlook and Key Assumptions<br>October 27, 2022<br> | Valmont Industries, Inc.<br>15<br>15<br>KEY ASSUMPTIONS<br>•<br>Steady market demand continues, driving mid<br>-<br>single digit<br>volume growth across segments<br>•<br>Stabilized raw material costs<br>•<br>Inflation in<br>-<br>line with global central bank expectations<br>•<br>Continued growth in R&D investments<br>•<br>~1.0% unfavorable foreign currency translation impact on net<br>sales<br>•<br>Full year tax rate of ~27.5%<br>11%<br>–<br>15%<br>Increase in Diluted EPS Y/Y<br>6%<br>–<br>9%<br>Increase in Net Sales Y/Y | ||||||||||||||
| --- | |||||||||||||||
| Fundamental Market Drivers Remain Resilient<br>October 27, 2022<br> | Valmont Industries, Inc.<br>16<br>INFRASTRUCTURE<br>•<br>Long term need for critical infrastructure investment globally,<br>supported by current and future stimulus<br>•<br>Ongoing demand and necessity for renewables, grid hardening and<br>resiliency and expanding ESG focus within utility markets<br>•<br>Ongoing investment in sustainable transportation infrastructure,<br>including lighting systems and long bridge systems<br>•<br>Increased number of economies actively fighting costs of corrosion<br>will drive need to extend life of steel products globally over long<br>term<br>•<br>Rapid acceleration of 5G network deployment and carriers’<br>investments support macro buildouts in suburban and<br>rural communities<br>•<br>Increasing demand for integrated smart technology solutions<br>AGRICULTURE<br>•<br>Favorable market conditions, including elevated commodity prices<br>and positive farmer sentiment are leading to increasing demand for<br>irrigation equipment and technology solutions globally<br>•<br>Food security with a growing population and continued<br>geo<br>-<br>political concerns are driving international governments’<br>investment in agriculture<br>•<br>Growth in technology adoption led by growers' increasing demand<br>for connected crop management and advanced analytics to reduce<br>input costs, increase land productivity and minimize farm labor<br>costs<br>•<br>Helping customers meet their own ESG initiatives through<br>ag solar solutions<br>Record Backlog of $2.0B at the End of 3Q 2022 | ||||||||||||||
| --- | |||||||||||||||
| Summary<br>October 27, 2022<br> | Valmont Industries, Inc.<br>17<br>Ability to grow sales through innovation and execution<br>while being flexible and responding<br>quickly to meet customer needs<br>Financial strength and flexibility<br>by executing on our pricing strategies and advancing operational<br>excellence across our footprint<br>Disciplined capital allocation<br>enables<br>high<br>-<br>growth strategic investments while returning capital to<br>shareholders through dividends and share repurchases<br>Investing in our employees and technology<br>to drive new products and services,<br>and build upon the strength of our operations<br>1<br>2<br>3<br>4<br>Poised and Well Positioned to Capture Growth and Drive Stakeholder Value in the Future | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>18<br>Q&A | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>19<br>APPENDIX | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>20<br>3Q 2022 Financial Summary<br>$M,<br>except for per share amounts<br>..<br>1<br>Includes<br>rounding<br>2<br>Please<br>see Reg G reconciliation to GAAP measures at end of document.<br>..<br>Net Sales<br>2022<br>2021<br>Change<br>YTD 2022<br>YTD 2021<br>Change<br>Infrastructure<br>$ 778.4<br>$ 634.3<br>22.7%<br>$ 2,224.0<br>$ 1,801.5<br>23.5%<br>Agriculture<br>327.3<br>240.3<br>36.2%<br>1,011.6<br>752.0<br>34.5%<br>Intersegment Sales<br>1<br>(8.3)<br>(5.8)<br>NM<br>(21.9)<br>(15.2)<br>NM<br>Net Sales<br>$<br>1,097.4<br>$ 868.8<br>26.3%<br>$ 3,213.7<br>$ 2,538.3<br>26.6%<br>Operating Income<br>$ 110.0<br>$ 76.2<br>44.3%<br>$ 323.5<br>$ 236.0<br>37.1%<br>Adjusted Operating Income<br>2<br>$ 114.1<br>$ 80.4<br>41.9%<br>$ 336.0<br>$ 248.5<br>35.2%<br>Net<br>Earnings<br>$ 72.1<br>$<br>51.7<br>39.6%<br>$ 210.5<br>$ 168.8<br>24.7%<br>Adjusted Net Earnings<br>$ 75.3<br>$ 55.3<br>36.2%<br>$ 220.9<br>$ 176.1<br>25.5%<br>Diluted Earnings Per Share (EPS)<br>$ 3.34<br>$ 2.40<br>39.2%<br>$<br>9.77<br>$ 7.86<br>24.3%<br>Adjusted Diluted Earnings Per<br>Share (EPS)<br>2<br>$ 3.49<br>$<br>2.57<br>35.8%<br>$ 10.25<br>$<br>8.20<br>25.0% | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>21<br>Reconciliation of Non<br>-<br>GAAP Financial Measures to Reported Financial Measures<br>The non<br>-<br>GAAP tables below disclose the impact of intangible asset amortization (<br>Prospera<br>) and stock<br>-<br>based compensation recognized for the<br>Prospera<br>employees on fiscal 2022 results. We believe the adjustments for<br>Prospera<br>allow for a better investor understanding of Agriculture segment performance<br>related to traditional segment products. Amounts may be impacted by rounding. We believe it is useful when considering compan<br>y p<br>erformance for the<br>non<br>-<br>GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related<br>reported GAAP<br>measures. | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>22<br>Reconciliation of Non<br>-<br>GAAP Financial Measures to Reported Financial Measures | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>23<br>Reconciliation of Non<br>-<br>GAAP Financial Measures to Reported Financial Measures<br>The non<br>-<br>GAAP tables below disclose the impact of intangible asset amortization (<br>Prospera<br>) and stock<br>-<br>based compensation recognized for<br>the<br>Prospera<br>employees on fiscal 2021 results. We believe the adjustments for<br>Prospera<br>allow for a better investor understanding of<br>Agriculture segment performance related to traditional segment products. The non<br>-<br>GAAP tables below also disclose the impact of a<br>write<br>off a receivable following arbitration of a commercial transaction from 2014, acquisition diligence and restructuring expense<br>s o<br>n segment<br>operating income and net earnings as well as the impact of the U.K. tax rate change on net earnings (adjusts GAAP tax rate fr<br>om<br>19.0% to<br>22.5%) on fiscal 2021 results. Amounts may be impacted by rounding. We believe it is useful when considering company perform<br>anc<br>e for<br>the non<br>-<br>GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the rela<br>ted<br>reported GAAP measures. | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>24<br>Reconciliation of Non<br>-<br>GAAP Financial Measures to Reported Financial Measures | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>25<br>Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings<br>(Dollars in thousands, except per share amounts) | ||||||||||||||
| --- | |||||||||||||||
| Historical Segment Financials<br>October 27, 2022<br> | Valmont Industries, Inc.<br>26<br>2020<br>Q1<br>Q2<br>Q3<br>Q4<br>FY<br>FY<br>Sales:<br>Infrastructure segment<br>549,646<br>$<br><br>617,604<br>$<br><br>634,283<br>$<br><br>693,568<br>$<br><br>2,495,101<br>$<br><br>2,261,804<br>$<br><br>Agriculture segment<br>229,664<br><br><br>281,965<br><br><br>240,331<br><br><br>276,757<br><br><br>1,028,717<br><br><br>645,831<br><br><br>Total<br>779,310<br><br><br>899,569<br><br><br>874,614<br><br><br>970,325<br><br><br>3,523,818<br><br><br>2,907,635<br><br><br>Intersegment Sales:<br>Infrastructure segment<br>(3,201)<br><br><br>(2,796)<br><br><br>(1,826)<br><br><br>(2,753)<br><br><br>(10,576)<br><br><br>(6,541)<br><br><br>Agriculture segment<br>(1,223)<br><br><br>(2,144)<br><br><br>(4,006)<br><br><br>(4,294)<br><br><br>(11,667)<br><br><br>(5,739)<br><br><br>Total<br>(4,424)<br><br><br>(4,940)<br><br><br>(5,832)<br><br><br>(7,047)<br><br><br>(22,243)<br><br><br>(12,280)<br><br><br>Net Sales:<br>Infrastructure segment<br>546,445<br><br><br>614,808<br><br><br>632,457<br><br><br>690,815<br><br><br>2,484,525<br><br><br>2,255,263<br><br><br>Agriculture segment<br>228,441<br><br><br>279,821<br><br><br>236,325<br><br><br>272,463<br><br><br>1,017,050<br><br><br>640,092<br><br><br>Total<br>774,886<br>$<br><br>894,629<br>$<br><br>868,782<br>$<br><br>963,278<br>$<br><br>3,501,575<br>$<br><br>2,895,355<br>$<br><br>Operating Income:<br>Infrastructure segment<br>54,449<br><br><br>61,550<br><br><br>71,422<br><br><br>45,985<br><br><br>233,406<br><br><br>209,172<br><br><br>Agriculture segment<br>38,748<br><br><br>41,984<br><br><br>27,735<br><br><br>28,560<br><br><br>137,027<br><br><br>83,046<br><br><br>Corporate<br>(15,986)<br><br><br>(20,909)<br><br><br>(22,962)<br><br><br>(23,791)<br><br><br>(83,648)<br><br><br>(66,265)<br><br><br>Total<br>77,211<br>$<br><br>82,625<br>$<br><br>76,195<br>$<br><br>50,754<br>$<br><br>286,785<br>$<br><br>225,953<br>$<br><br>2021 | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>27<br>Infrastructure Investment and Jobs Act (IIJA)<br>Infrastructure Investment and Jobs Act Spending Breakdown (In Order<br>-<br>Most to Least)<br>Previously-Passed Transportation Funding | $650B<br>Roads, Bridges and Related Programs | $111B<br>Energy, Power and Electric Grid Reliability | $107.5B<br>Freight and Passenger Rail | $66B<br>Broadband | $65B<br>Water and Wastewater Infrastructure | $55B<br>Public Transportation | $39.2B<br>Airports | $25B<br>Natural Disaster Prevention and Mitigation | $23.3B<br>Cleaning-Up Abandoned Sites | $21B<br>Army Corps of Engineers | $16.7B<br>Highway and Pedestrian Safety | $11B<br>Ports and Coast Guard | $7.8B<br>Cybersecurity and other Infrastructure Programs | $10.11B<br>Source: Grassley.senate.gov |
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>28<br>5G Adoption and Capex Spend Forecasts<br>Source: GSM Association | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>29<br>U.S. Net Cash Farm Income by Year<br>Source: USDA (September 1, 2022) | ||||||||||||||
| --- | |||||||||||||||
| U.S. Drought Condition<br>October 27, 2022<br> | Valmont Industries, Inc.<br>30<br>Source: Drought Monitor (October 20, 2022) | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>31<br>2012<br>-<br>2021 Historical Free Cash Flow<br>1<br>1<br>Adjusted earnings for purposes of calculating FCF conversion may not agree to the adjusted net earnings. The difference is du<br>e<br>to cash restructuring, debt refinancing, or other non<br>-<br>recurring expenses which were settled in cash in the year of occurrence.<br>($M)<br>2012<br>2013<br>2014<br>2015<br>2016<br>2017<br>2018<br>2019<br>2020<br>2021<br>Net cash flows from operating activities<br>$ 197.1<br>$ 396.4<br>$ 174.1<br>$ 272.3<br>$ 232.8<br>$ 133.1<br>$ 153.0<br>$ 307.6<br>$ 316.3<br>$ 65.9<br>Net cash flows from investing activities<br>(136.7)<br>(131.7)<br>(256.9)<br>(48.2)<br>(53.0)<br>(49.6)<br>(155.4)<br>(168.1)<br>(104.0)<br>(417.3)<br>Net cash flows from financing activities<br>(16.4)<br>(37.4)<br>(136.8)<br>(32.0)<br>(95.2)<br>(32.0)<br>(162.1)<br>(98.9)<br>(173.8)<br>133.5<br>Net cash flows from operating activities<br>$ 197.1<br>$ 396.4<br>$ 174.1<br>$ 272.3<br>$ 232.8<br>$ 133.1<br>$ 153.0<br>$ 307.6<br>$ 316.3<br>$ 65.9<br>Purchase of plant, property, and equipment<br>(97.1)<br>(106.8)<br>(73.0)<br>(45.5)<br>(57.9)<br>(55.3)<br>(72.0)<br>(97.4)<br>(106.7)<br>(107.8)<br>Free Cash flows<br>100.0<br>289.7<br>101.1<br>226.8<br>174.9<br>77.8<br>81.0<br>210.2<br>209.6<br>(41.9)<br>Net earnings attributed to Valmont Industries, Inc.<br>$ 234.1<br>$ 278.5<br>$ 183.9<br>$ 40.1<br>$ 175.5<br>$ 120.5<br>$ 101.8<br>$ 146.4<br>$ 140.7<br>$ 195.6<br>Adjusted net earnings attributed to Valmont Industries, Inc.<br>N/A<br>$ 295.1<br>$ 187.7<br>$ 131.7<br>$ 139.9<br>$ 162.7<br>$ 130.4<br>N/A<br>$ 159.8<br>$ 222.3<br>Free Cash Flow Conversion<br>-<br>GAAP<br>0.43<br>1.04<br>0.55<br>5.66<br>1.00<br>0.65<br>0.80<br>1.44<br>1.49<br>(0.21)<br>Free Cash Flow Conversion<br>-<br>Adjusted<br>N/A<br>0.98<br>0.53<br>1.71<br>1.25<br>0.48<br>0.62<br>N/A<br>1.31<br>(0.19)<br>1) Reconciliation of Net Earnings to Adjusted Figures<br>Net earnings attributed to Valmont Industries, Inc.<br>$ 234.1<br>$ 278.5<br>$ 183.9<br>$ 40.1<br>$ 175.5<br>$ 120.5<br>$ 101.8<br>$ 146.4<br>$ 140.7<br>$ 195.6<br>Change in valuation allowance against deferred tax assets<br>-<br>-<br>-<br>7.1<br>(20.7)<br>41.9<br>-<br>-<br>-<br>5.0<br>Impairment of long<br>-<br>lived assets<br>-<br>12.2<br>-<br>61.8<br>1.1<br>-<br>28.6<br>-<br>19.1<br>21.7<br>Reversal of contingent liability<br>-<br>-<br>-<br>(16.6)<br>-<br>-<br>-<br>-<br>-<br>Other non<br>-<br>recurring expenses (non<br>-<br>cash)<br>-<br>-<br>-<br>18.1<br>-<br>-<br>-<br>-<br>Deconsolidation of Delta EMD, after<br>-<br>tax and NCI<br>-<br>4.4<br>-<br>-<br>-<br>-<br>-<br>-<br>-<br>-<br>Noncash loss from Delta EMD shares<br>-<br>-<br>3.8<br>4.6<br>0.6<br>0.2<br>-<br>-<br>-<br>-<br>Adjusted net earnings attributed to Valmont Industries, Inc.<br>$ 234.1<br>$ 295.1<br>$ 187.7<br>$ 131.7<br>$ 139.9<br>$ 162.7<br>$ 130.4<br>$ 146.4<br>$ 159.8<br>$ 222.3<br>10 Year Average FCF is $143M; Last 5 Years Has Averaged $107M | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>32<br>Years of rapid raw material cost inflation<br>GAAP<br>0.43X<br>1.04X<br>0.55X<br>5.66X<br>1.01X<br>0.67X<br>0.86X<br>1.37X<br>1.49X<br>(0.21X)<br>Adj.<br>N/A<br>0.98X<br>0.53X<br>1.71X<br>1.27X<br>0.49X<br>0.66X<br>N/A<br>1.28X<br>(0.19X)<br>2012<br>–<br>2021 Free Cash Flow<br>1<br>($M)<br>100<br>290<br>101<br>227<br>175<br>78<br>81<br>210<br>210<br>(42)<br>143<br> (100)<br> (50)<br> -<br> 50<br> 100<br> 150<br> 200<br> 250<br> 300<br> 350<br>2012<br>2013<br>2014<br>2015<br>2016<br>2017<br>2018<br>2019<br>2020<br>2021<br>10 Year<br>Avg<br>10<br>-<br>yr Avg. $143M<br>GAAP 1.28X<br>Adj. 0.84X<br>Historical FCF Conversion by Year<br>1<br>Strong Free Cash Flow throughout the Cycle<br>1<br>We use the non<br>-<br>GAAP measure of FCF, which we define as GAAP net cash flows from operating activities reduced by capex. We belie<br>ve that FCF is a useful performance measure for management and useful to investors as the basis for comparing our performance<br>wi<br>th other<br>companies. Our measure of FCF may not be directly comparable to similar measures used by other companies. | ||||||||||||||
| --- | |||||||||||||||
| October 27, 2022<br> | Valmont Industries, Inc.<br>33<br>Calculation of Adjusted EBITDA and Leverage<br>Ratio<br>Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted<br>EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior<br>four quarters. See “Leverage Ratio “ below.<br>TTM<br>2<br>4<br>-<br>Sep<br>-<br>22<br>Net earnings attributable to Valmont Industries, Inc.<br>$<br>237,387<br>Interest expense<br>45,423<br>Income tax expense<br>95,623<br>Stock<br>-<br>based compensation<br>40,823<br>Depreciation and amortization expense<br>97,615<br>EBITDA<br>516,871<br>Asset impairments<br>27,911<br>Adjusted EBITDA<br>–<br>last four quarters<br>$<br>544,782<br>Net indebtedness<br>$<br>825,949<br>Leverage Ratio<br>1.52<br>Interest<br>-<br>bearing debt<br>$<br>942,170<br>Less:<br>Cash and cash equivalents in excess of $50 million<br>116,221<br>Net indebtedness<br>$<br>825,949<br>($000s) | ||||||||||||||
| --- |