VMI 8-K
Valmont Industries Inc (VMI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
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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 | ||
99.2 | ||
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: | | |
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% adjusted1) compared to $76.2 million or 8.8% of net sales ($80.4 million or 9.3% adjusted1) |
| ● | Record Third Quarter Diluted Earnings per Share (EPS) of $3.34 ($3.49 adjusted1) compared to $2.40 ($2.57 adjusted1) |
| ● | 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 |
| ● | 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 | | Adjusted1 | | |||||||||||||
(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 | | Adjusted1 | | |||||||||||||
(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% adjusted1) compared to $27.7 million or 11.7% of net sales ($32.0 million or 13.5% adjusted1) in 2021. The benefit of higher average selling prices and additional volume leverage was partially offset by higher SG&A, including incremental R&D expense for technology investments.
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 EPS1 | | $12.90 to $13.30 | $12.95 to $13.30 |
Adjusted Diluted EPS1 | | $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-tax1 | | | 4,175 | | | 0.19 | | | 12,458 | | | 0.58 |
Tax effect of adjustments2 | | | (974) | | | (0.05) | | | (2,106) | | | (0.10) |
Net earnings attributable to Valmont Industries, Inc. - Adjusted1 | | $ | 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-tax1 | | | 4,238 | | | 0.20 | | | 12,463 | | | 0.58 |
Change in U.K. statutory tax rate | | | — | | | — | | | (2,819) | | | (0.13) |
Tax effect of adjustments2 | | | (604) | | | (0.03) | | | (2,358) | | | (0.11) |
Net earnings attributable to Valmont Industries, Inc. - Adjusted1 | | $ | 55,284 | | $ | 2.57 | | $ | 176,060 | | $ | 8.20 |
Average shares outstanding (000’s) - Diluted | | | | | | 21,552 | | |
| | | 21,483 |
1Earnings per share includes rounding
2The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.
| | Thirteen weeks ended 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.
###
| © 2022 Valmont ® Industries, Inc. Valmont Industries, Inc. Third Quarter 2022 Earnings Presentation October 27, 2022 |
| 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 fa cto rs that could cause the actual results of the Company to differ materially from the results expressed or implied by such stateme nts , including general economic and business conditions, conditions affecting the industries served by the Company and its subsidi ari es including the continuing and developing effects of the pandemic including the effects of the outbreak on the general economy and the specific economic responses to the Company’s products and services, the overall market acceptance of such products and services, the integration of acquisitions and other factors disclosed in the Company’s periodic reports filed with the Securi tie s and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance of new pr oducts, product pricing, domestic and international competitive environments, geopolitical risks and actions and policy changes of do mes tic and foreign governments. Consequently, such forward - looking statements should be regarded as the Company’s current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the result s o f 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 27, 2022 | Valmont Industries, Inc. 2 |
| STEVE KANIEWSKI PRESIDENT & CHIEF EXECUTIVE OFFICER October 27, 2022 | Valmont Industries, Inc. 3 |
| 3Q 2022 Summary October 27, 2022 | Valmont Industries, Inc. 4 • Record sales as strong broad - based demand drove higher volumes despite macroeconomic volatility • Disciplined pricing strategy to capture delivered value and offset inflation • Record global backlog of $2.0 billion, reflecting strong market demand • Delivering differentiated, sustainable solutions to our customers TOTAL 3Q 2022 SALES $1,097.4M; +26% Y/Y AGRICULTURE $327.3M; +36% Y/Y 30% of Sales • Market fundamentals and farmer sentiment driving robust project pipeline, most notably in Middle East and Africa • Pressure on crop yields and expected stock levels due to persistent drought conditions, keeping global commodity prices elevated • Typical 3Q seasonality less pronounced as we delivered 2Q backlog INFRASTRUCTURE $778.4M; +23% Y/Y 70% of Sales • Led by strong underlying demand across global markets for all product lines, with favorable pricing most notably TD&S, L&T and Telecommunications • Continued investments in grid resilience, clean energy solutions, upgrading infrastructure and 5G rollouts • Expect future benefits from Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act |
| Strategic Pillars Enable Sustainable Business Outcomes October 27, 2022 | Valmont Industries, Inc. 5 Our Strategic Approach is Contributing to Shareholder Value BUILDING A MORE RESILIENT BUSINESS • Focused on high - growth and diverse end markets with favorable long - term demand trends • Targeted investments in innovation that contribute to sustainability goals • Organic growth and strategic acquisitions • Ag Tech sales • ConcealFab acquisition Optimizing Talent and Technology Accelerating Innovation Elevating ESG Operational Excellence with ESG Focus Accelerating Growth Expanding Markets that We Serve EXECUTING OUR THREE STRATEGIC PILLARS |
| Strategically Growing our Solar Market Presence October 27, 2022 | Valmont Industries, Inc. 6 Increased Renewable Energy Demand is Catapulting Solar Growth VALMONT SOLAR AG SOLAR • 2018 - Convert Italia acquisition • Focus on distributed generation projects • Key international markets have more pronounced barriers to entry and favorable legislation • Targeting additional growth in domestic U.S. market • Strong competitive advantages • Expect ~$120M in 2022 sales • 2020 - Solbras majority stake acquisition • Integrated with our world - class Valley dealer network • Became the sole global player in this underserved market • Partner of choice due to unparalleled service and support • Expect to exceed $100M in sales by the end of 2022 |
| October 27, 2022 | Valmont Industries, Inc. 7 AVNER APPLBAUM EVP & CHIEF FINANCIAL OFFICER |
| 3Q 2022 Financial Summary October 27, 2022 | Valmont Industries, Inc. 8 8 1 Please see Reg G reconciliation to GAAP measures at end of document. • Mid - single digit volume growth on strong demand across the portfolio and a relentless focus on price management; 8 th consecutive quarter of double - digit Y/Y sales growth • Operating margin improved to 10.0% (10.4% adjusted 1 ) reflecting higher volumes, improved fixed - cost leverage and execution of pricing strategy • EPS growth driven by higher operating income, partially offset by higher tax expense due to changes in the geographic mix of earnings SALES ($M) +26.3% $868.8 $1,097.4 2021 2022 OPERATING INCOME ($M) GAAP Adjusted 1 +44.3% +41.9% $76.2 $110.0 $80.4 $114.1 2021 2022 2021 2022 $2.40 $3.34 $2.57 $3.49 2021 2022 2021 2022 DILUTED EPS GAAP Adjusted 1 +39.2% +35.8% |
| 3Q 2022 Results | Infrastructure October 27, 2022 | Valmont Industries, Inc. 9 9 • Double - digit s ales growth across all product lines, net of 2.3% FX headwind, on strong demand and favorable pricing globally, primarily in TD&S, L&T, and Telecommunications • Volume growth, notably in the Renewable Energy product line and contribution from ConcealFab acquisition • Operating margin improved 80 bps to 12.1%, due to favorable pricing and improved fixed - cost leverage SALES ($M) 2021 2022 % Transmission, Distribution and Substation (TD&S) $ 239.6 $ 304.8 +27% Lighting and Transportation (L&T) 218.0 241.6 +11% Coatings 76.8 92.0 +20% Telecommunications 63.1 92.8 +47% Renewable Energy 36.9 47.2 +28% $634.3 $778.4 2021 2022 $71.4 $93.6 2021 2022 SALES ($M) +22.7% OPERATING INCOME ($M) +31.0% |
| 3Q 2022 Results | Agriculture October 27, 2022 | Valmont Industries, Inc. 10 10 1 Please see Reg G reconciliation to GAAP measures at end of document. 2 Technology sales are reported as a subset of total Agriculture segment sales $240.3 $327.3 2021 2022 SALES ($M) 2021 2022 % North American Irrigation $ 116.3 $ 178.6 +54% International Irrigation 124.0 148.6 +20% Agricultural Technology 2 21.4 24.3 +13% $27.7 $43.3 $32.0 $47.4 2021 2022 2021 2022 SALES ($M) +36.2% OPERATING INCOME ($M) GAAP Adjusted 1 +56.0% +48.4% • Sales increased due to higher average selling prices of irrigation equipment globally and higher volumes, partially offset by lower project sales to Egypt • Brazil sales grew ~$ 40 M Y/ Y due to ongoing, robust demand in the country for irrigation and ag solar solutions • Operating margins increased due to the benefit of higher average selling prices and additional volume leverage, partially offset by higher SG&A, including incremental R&D expense for technology investments |
| YTD Cash Flow Highlights October 27, 2022 | Valmont Industries, Inc. 11 ($M) YTD 9/24/2022 Net Cash Flows from Operating Activities $ 184 Net Cash Flows from Investing Activities (106) Net Cash Flows from Financing Activities (79) Net Cash Flows from Operating Activities $ 184 Purchase of Property, Plant & Equipment (67) Free Cash Flows $ 117 FCF Improvement Driven By Diligent Working Capital Management |
| Balanced Approach to Capital Allocation October 27, 2022 | Valmont Industries, Inc. 12 12 GROWING OUR BUSINESS RETURNING CASH TO SHAREHOLDERS • Now expect FY2022 CapEx of $95 - $105M due to extended machinery lead times • Investments to support strategic growth initiatives and Industry 4.0 advanced manufacturing • Acquired ConcealFab to expand 5G infrastructure presence; will be accretive in year one • Targeting high growth opportunities in end markets with favorable and global long - term demand trends • Returns exceeding cost of capital within 3 years • Opportunistic approach, supported by free cash flow • ~$101M remains on current authorization • 10% dividend increase announced February 2022 • Payout ratio target: 22% of earnings • Current payout: ~16% 2022 YTD Capital Deployment: $161M $67M Capital Expenditures $39M Acquisitions $20M Share Repurchases $34M Dividends |
| Strong Balance Sheet and Liquidity October 27, 2022 | Valmont Industries, Inc. 13 13 Cash $166M Total Long - Term Debt $935M Shareholders’ Equity $1,573M Total Debt to Adj. EBITDA 1 1.5x Available Credit under Revolving Credit Facility 2 $595M Cash $166M Total Available Liquidity $761M As of September 24, 2022 ► Long - term debt mostly fixed - rate, with long - dated maturities to 2044 and 2054 ► Total Debt to Adjusted EBITDA remains within our desired range of 1.5 to 2.5 times ► Capital allocation strategy has not changed, focused on strategically supporting business growth 1 See slide 33 for calculation of Adjusted EBITDA and Leverage Ratio. 2 $800M Total Revolver less borrowings and Standby LC’s of $205M. |
| Full Year 2022 Outlook and Key Assumptions October 27, 2022 | Valmont Industries, Inc. 14 14 KEY ASSUMPTIONS • Revised net sales growth is primarily to reflect third quarter results • Revised Diluted EPS to reflect expected mix of earnings and timing of project deliveries • Expect full - year mid - single digit volume growth • Expect an unfavorable foreign currency translation impact of ~2.0% of net sales vs prior year • Expect a full year tax rate of ~27.5% due to the expected mix of earnings • Expect capital expenditures to be in the range of $95 - $105 million due to extended machinery lead times 1 Exclusive of potential future restructuring activities. 2 Please see Reg G reconciliation to GAAP measures at end of document. PREVIOUS 2022 OUTLOOK 1 20% – 21% Increase in Net Sales Y/Y ~ (2.0%) FX Translation Net Sales Impact $13.60 – $14.00 Adj. Diluted EPS 2 $12.90 – $13.30 GAAP Diluted EPS ~27.5% Tax Rate ~ $4.2B Net Sales CURRENT 2022 OUTLOOK 1 22% Increase in Net Sales Y/Y ~ (2.0%) FX Translation Net Sales Impact $13.65 – $14.00 Adj. Diluted EPS 2 $12.95 – $13.30 GAAP Diluted EPS ~27.5% Tax Rate ~ $4.3B Net Sales $110 to $120 million Capital Expenditures $95 to $105 million Capital Expenditures |
| Preliminary 2023 Outlook and Key Assumptions October 27, 2022 | Valmont Industries, Inc. 15 15 KEY ASSUMPTIONS • Steady market demand continues, driving mid - single digit volume growth across segments • Stabilized raw material costs • Inflation in - line with global central bank expectations • Continued growth in R&D investments • ~1.0% unfavorable foreign currency translation impact on net sales • Full year tax rate of ~27.5% 11% – 15% Increase in Diluted EPS Y/Y 6% – 9% Increase in Net Sales Y/Y |
| Fundamental Market Drivers Remain Resilient October 27, 2022 | Valmont Industries, Inc. 16 INFRASTRUCTURE • Long term need for critical infrastructure investment globally, supported by current and future stimulus • Ongoing demand and necessity for renewables, grid hardening and resiliency and expanding ESG focus within utility markets • Ongoing investment in sustainable transportation infrastructure, including lighting systems and long bridge systems • Increased number of economies actively fighting costs of corrosion will drive need to extend life of steel products globally over long term • Rapid acceleration of 5G network deployment and carriers’ investments support macro buildouts in suburban and rural communities • Increasing demand for integrated smart technology solutions AGRICULTURE • Favorable market conditions, including elevated commodity prices and positive farmer sentiment are leading to increasing demand for irrigation equipment and technology solutions globally • Food security with a growing population and continued geo - political concerns are driving international governments’ investment in agriculture • Growth in technology adoption led by growers' increasing demand for connected crop management and advanced analytics to reduce input costs, increase land productivity and minimize farm labor costs • Helping customers meet their own ESG initiatives through ag solar solutions Record Backlog of $2.0B at the End of 3Q 2022 |
| Summary October 27, 2022 | Valmont Industries, Inc. 17 Ability to grow sales through innovation and execution while being flexible and responding quickly to meet customer needs Financial strength and flexibility by executing on our pricing strategies and advancing operational excellence across our footprint Disciplined capital allocation enables high - growth strategic investments while returning capital to shareholders through dividends and share repurchases Investing in our employees and technology to drive new products and services, and build upon the strength of our operations 1 2 3 4 Poised and Well Positioned to Capture Growth and Drive Stakeholder Value in the Future |
| October 27, 2022 | Valmont Industries, Inc. 18 Q&A |
| October 27, 2022 | Valmont Industries, Inc. 19 APPENDIX |
| October 27, 2022 | Valmont Industries, Inc. 20 3Q 2022 Financial Summary $M, except for per share amounts .. 1 Includes rounding 2 Please see Reg G reconciliation to GAAP measures at end of document. .. Net Sales 2022 2021 Change YTD 2022 YTD 2021 Change Infrastructure $ 778.4 $ 634.3 22.7% $ 2,224.0 $ 1,801.5 23.5% Agriculture 327.3 240.3 36.2% 1,011.6 752.0 34.5% Intersegment Sales 1 (8.3) (5.8) NM (21.9) (15.2) NM Net Sales $ 1,097.4 $ 868.8 26.3% $ 3,213.7 $ 2,538.3 26.6% Operating Income $ 110.0 $ 76.2 44.3% $ 323.5 $ 236.0 37.1% Adjusted Operating Income 2 $ 114.1 $ 80.4 41.9% $ 336.0 $ 248.5 35.2% Net Earnings $ 72.1 $ 51.7 39.6% $ 210.5 $ 168.8 24.7% Adjusted Net Earnings $ 75.3 $ 55.3 36.2% $ 220.9 $ 176.1 25.5% Diluted Earnings Per Share (EPS) $ 3.34 $ 2.40 39.2% $ 9.77 $ 7.86 24.3% Adjusted Diluted Earnings Per Share (EPS) 2 $ 3.49 $ 2.57 35.8% $ 10.25 $ 8.20 25.0% |
| October 27, 2022 | Valmont Industries, Inc. 21 Reconciliation of Non - GAAP Financial Measures to Reported Financial Measures The non - GAAP tables below disclose the impact of intangible asset amortization ( Prospera ) and stock - based compensation recognized for the Prospera employees on fiscal 2022 results. We believe the adjustments for Prospera allow for a better investor understanding of Agriculture segment performance related to traditional segment products. Amounts may be impacted by rounding. We believe it is useful when considering compan y p erformance 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. |
| October 27, 2022 | Valmont Industries, Inc. 22 Reconciliation of Non - GAAP Financial Measures to Reported Financial Measures |
| October 27, 2022 | Valmont Industries, Inc. 23 Reconciliation of Non - GAAP Financial Measures to Reported Financial Measures The non - GAAP tables below disclose the impact of intangible asset amortization ( Prospera ) and stock - based compensation recognized for the Prospera employees on fiscal 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 expense s o n 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 fr om 19.0% to 22.5%) on fiscal 2021 results. Amounts may be impacted by rounding. We believe it is useful when considering company perform anc e for the non - GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the rela ted reported GAAP measures. |
| October 27, 2022 | Valmont Industries, Inc. 24 Reconciliation of Non - GAAP Financial Measures to Reported Financial Measures |
| October 27, 2022 | Valmont Industries, Inc. 25 Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings (Dollars in thousands, except per share amounts) |
| Historical Segment Financials October 27, 2022 | Valmont Industries, Inc. 26 2020 Q1 Q2 Q3 Q4 FY FY Sales: Infrastructure segment 549,646 $ 617,604 $ 634,283 $ 693,568 $ 2,495,101 $ 2,261,804 $ Agriculture segment 229,664 281,965 240,331 276,757 1,028,717 645,831 Total 779,310 899,569 874,614 970,325 3,523,818 2,907,635 Intersegment Sales: Infrastructure segment (3,201) (2,796) (1,826) (2,753) (10,576) (6,541) Agriculture segment (1,223) (2,144) (4,006) (4,294) (11,667) (5,739) Total (4,424) (4,940) (5,832) (7,047) (22,243) (12,280) Net Sales: Infrastructure segment 546,445 614,808 632,457 690,815 2,484,525 2,255,263 Agriculture segment 228,441 279,821 236,325 272,463 1,017,050 640,092 Total 774,886 $ 894,629 $ 868,782 $ 963,278 $ 3,501,575 $ 2,895,355 $ Operating Income: Infrastructure segment 54,449 61,550 71,422 45,985 233,406 209,172 Agriculture segment 38,748 41,984 27,735 28,560 137,027 83,046 Corporate (15,986) (20,909) (22,962) (23,791) (83,648) (66,265) Total 77,211 $ 82,625 $ 76,195 $ 50,754 $ 286,785 $ 225,953 $ 2021 |
| October 27, 2022 | Valmont Industries, Inc. 27 Infrastructure Investment and Jobs Act (IIJA) Infrastructure Investment and Jobs Act Spending Breakdown (In Order - Most to Least) Previously-Passed Transportation Funding | $650B Roads, Bridges and Related Programs | $111B Energy, Power and Electric Grid Reliability | $107.5B Freight and Passenger Rail | $66B Broadband | $65B Water and Wastewater Infrastructure | $55B Public Transportation | $39.2B Airports | $25B Natural Disaster Prevention and Mitigation | $23.3B Cleaning-Up Abandoned Sites | $21B Army Corps of Engineers | $16.7B Highway and Pedestrian Safety | $11B Ports and Coast Guard | $7.8B Cybersecurity and other Infrastructure Programs | $10.11B Source: Grassley.senate.gov |
| October 27, 2022 | Valmont Industries, Inc. 28 5G Adoption and Capex Spend Forecasts Source: GSM Association |
| October 27, 2022 | Valmont Industries, Inc. 29 U.S. Net Cash Farm Income by Year Source: USDA (September 1, 2022) |
| U.S. Drought Condition October 27, 2022 | Valmont Industries, Inc. 30 Source: Drought Monitor (October 20, 2022) |
| October 27, 2022 | Valmont Industries, Inc. 31 2012 - 2021 Historical Free Cash Flow 1 1 Adjusted earnings for purposes of calculating FCF conversion may not agree to the adjusted net earnings. The difference is du e to cash restructuring, debt refinancing, or other non - recurring expenses which were settled in cash in the year of occurrence. ($M) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Net cash flows from operating activities $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 Net cash flows from investing activities (136.7) (131.7) (256.9) (48.2) (53.0) (49.6) (155.4) (168.1) (104.0) (417.3) Net cash flows from financing activities (16.4) (37.4) (136.8) (32.0) (95.2) (32.0) (162.1) (98.9) (173.8) 133.5 Net cash flows from operating activities $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 Purchase of plant, property, and equipment (97.1) (106.8) (73.0) (45.5) (57.9) (55.3) (72.0) (97.4) (106.7) (107.8) Free Cash flows 100.0 289.7 101.1 226.8 174.9 77.8 81.0 210.2 209.6 (41.9) Net earnings attributed to Valmont Industries, Inc. $ 234.1 $ 278.5 $ 183.9 $ 40.1 $ 175.5 $ 120.5 $ 101.8 $ 146.4 $ 140.7 $ 195.6 Adjusted net earnings attributed to Valmont Industries, Inc. N/A $ 295.1 $ 187.7 $ 131.7 $ 139.9 $ 162.7 $ 130.4 N/A $ 159.8 $ 222.3 Free Cash Flow Conversion - GAAP 0.43 1.04 0.55 5.66 1.00 0.65 0.80 1.44 1.49 (0.21) Free Cash Flow Conversion - Adjusted N/A 0.98 0.53 1.71 1.25 0.48 0.62 N/A 1.31 (0.19) 1) Reconciliation of Net Earnings to Adjusted Figures Net earnings attributed to Valmont Industries, Inc. $ 234.1 $ 278.5 $ 183.9 $ 40.1 $ 175.5 $ 120.5 $ 101.8 $ 146.4 $ 140.7 $ 195.6 Change in valuation allowance against deferred tax assets - - - 7.1 (20.7) 41.9 - - - 5.0 Impairment of long - lived assets - 12.2 - 61.8 1.1 - 28.6 - 19.1 21.7 Reversal of contingent liability - - - (16.6) - - - - - Other non - recurring expenses (non - cash) - - - 18.1 - - - - Deconsolidation of Delta EMD, after - tax and NCI - 4.4 - - - - - - - - Noncash loss from Delta EMD shares - - 3.8 4.6 0.6 0.2 - - - - Adjusted net earnings attributed to Valmont Industries, Inc. $ 234.1 $ 295.1 $ 187.7 $ 131.7 $ 139.9 $ 162.7 $ 130.4 $ 146.4 $ 159.8 $ 222.3 10 Year Average FCF is $143M; Last 5 Years Has Averaged $107M |
| October 27, 2022 | Valmont Industries, Inc. 32 Years of rapid raw material cost inflation GAAP 0.43X 1.04X 0.55X 5.66X 1.01X 0.67X 0.86X 1.37X 1.49X (0.21X) Adj. N/A 0.98X 0.53X 1.71X 1.27X 0.49X 0.66X N/A 1.28X (0.19X) 2012 – 2021 Free Cash Flow 1 ($M) 100 290 101 227 175 78 81 210 210 (42) 143 (100) (50) - 50 100 150 200 250 300 350 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 10 Year Avg 10 - yr Avg. $143M GAAP 1.28X Adj. 0.84X Historical FCF Conversion by Year 1 Strong Free Cash Flow throughout the Cycle 1 We use the non - GAAP measure of FCF, which we define as GAAP net cash flows from operating activities reduced by capex. We belie ve that FCF is a useful performance measure for management and useful to investors as the basis for comparing our performance wi th other companies. Our measure of FCF may not be directly comparable to similar measures used by other companies. |
| October 27, 2022 | Valmont Industries, Inc. 33 Calculation of Adjusted EBITDA and Leverage Ratio Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior four quarters. See “Leverage Ratio “ below. TTM 2 4 - Sep - 22 Net earnings attributable to Valmont Industries, Inc. $ 237,387 Interest expense 45,423 Income tax expense 95,623 Stock - based compensation 40,823 Depreciation and amortization expense 97,615 EBITDA 516,871 Asset impairments 27,911 Adjusted EBITDA – last four quarters $ 544,782 Net indebtedness $ 825,949 Leverage Ratio 1.52 Interest - bearing debt $ 942,170 Less: Cash and cash equivalents in excess of $50 million 116,221 Net indebtedness $ 825,949 ($000s) |
