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
February 16, 2022
Date of Report (date of earliest event reported)
Valmont Industries, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | |||
|---|---|---|---|
| (State or other jurisdiction of incorporation) | |||
| 1-31429 | 47-0351813 | ||
| (Commission File Number) | (I.R.S. Employer Identification No.) | ||
| 15000 Valmont Plaza | 68154 | ||
| Omaha | NE | ||
| (Address of Principal Executive Offices) | (Zip Code) |
(402) 963-1000
Registrant's telephone number, including area code
One Valmont Plaza, Omaha NE 68154
__________________________________________________________________________________
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $1.00 par value | VMI | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Item 2.02. Results of Operations and Financial Condition.
Valmont Industries, Inc. issued a press release on February 16, 2022 announcing its financial results for its fiscal year ended December 25, 2021. The press release, along with the presentation to be used during its earnings call on February 17, 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 February 16, 2022 |
| 99.2 | Presentation Slides for earnings call on February 17, 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: February 16, 2022 | ||
| By: | /s/ AVNER M. APPLBAUM | |
| Name: Avner M. Applbaum | ||
| Title: Executive Vice President and Chief Financial Officer |
Document
| FOR IMMEDIATE RELEASE | ||
|---|---|---|
| Contact: | Renee Campbell | |
| Phone: | +1 402.963.1057 | |
| Date: | February 16, 2022 |
Valmont Reports Fourth Quarter and Full Year 2021 Results
Achieved Record Annual Sales of $3.5 Billion
Omaha, NE - Valmont Industries, Inc. (NYSE: VMI), a leading global provider of engineered products and services for infrastructure development and irrigation equipment and services for agriculture, today reported financial results for the fourth quarter and fiscal year ended December 25, 2021.
Fourth Quarter 2021 Highlights (all metrics compared to Fourth Quarter 2020 unless otherwise noted)
•Record Net Sales of $963.3 million increased 20.7%, with growth in all segments led by significantly higher Irrigation sales
•Operating Income of $50.8 million, or 5.3% of sales ($85.6 million or 8.9% adjusted1) compared to $54.1 million or 6.8% of sales ($68.8 million or 8.6% adjusted1)
•Diluted Earnings per Share (EPS) of $1.25 ($2.73 adjusted1) compared to $1.68 ($2.20 adjusted1)
•Repurchased 8,800 shares of company stock for $2.0 million at an average price of $227.22 per share
•Incurred a higher GAAP tax rate of 35.3% due to recognizing a $5.0 million valuation allowance against deferred tax assets for the wind structures subsidiary; tax rate on an adjusted basis was lower, driven by a more favorable geographic mix of earnings
•Record year-end backlog of more than $1.6 billion, an increase of more than 40.0% since the end of fiscal 2020, and an increase of more than 5.0% since the end of third quarter 2021, reflecting improved pricing and continued strong market demand across the portfolio
Full Year 2021 Highlights (all metrics compared to Full Year 2020 unless otherwise noted)
•Record Net Sales of $3.5 billion, an increase of 20.9%
◦Sales growth in all segments, led by Irrigation which grew 59.3% to a record $1.03 billion
•Operating income improved to $286.8 million or 8.2% of sales ($334.0 million or 9.5% adjusted1), compared to $226.0 million or 7.8% of sales ($268.5 million or 9.3% adjusted1)
1 Please see Reg G reconciliation to GAAP measures at end of document
◦Higher operating income was led by favorable pricing and higher volumes, including significant volume growth in Irrigation, and operating margins of nearly 11.0% in Engineered Support Structures
•Diluted EPS of $9.10 ($10.92 adjusted1) compared to $6.57 ($8.18 adjusted1)
•Capital expenditures were $108.0 million, including approximately $45.0 million for strategic investments, which included a new spun concrete utility distribution pole facility in Bristol, Indiana, capacity expansion of infrastructure facilities in Mexico, and technology investments across the organization, all to support global market growth
•Deployed $313.0 million of cash for two acquisitions, both in the Irrigation segment: Prospera Technologies Ltd. and PivoTrac, accelerating the Company's global Ag Tech growth strategy
•Returned $67.5 million of capital to shareholders through share repurchases of $26.1 million and dividends of $41.4 million
•Enhanced ESG, a top strategic imperative and part of the Company's long-standing tagline of 'Conserving Resources. Improving Life® '
◦Enhanced the 2021 Valmont Sustainability Report and launched a dedicated Sustainability website, while updating key disclosures and highlighting Valmont products and solutions that support ESG principles
◦Established new environmental and diversity goals for 2025 and 2030
◦Initiated Global Reporting Initiative (GRI) reporting to align with current GRI Standards and alignment with Sustainability Accounting Standards Board (SASB), Task Force on Climate-Related Financial Disclosures (TCFD) frameworks, and four of the seventeen United Nations Sustainable Development Goals (SDGs):
▪SDG 2: Zero Hunger
▪SDG 7: Affordable and Clean Energy
▪SDG 9: Industry, Innovation and Infrastructure
▪SDG 11: Sustainable Cities and Communities
1 Please see Reg G reconciliation of GAAP sales, operating income, net earnings and EPS to Adjusted figures at end of document
Key Financial Metrics
| Fourth Quarter 2021 | GAAP | Adjusted1 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (000's except per share amounts) | 12/25/2021 4Q 2021 | 12/26/2020<br>4Q 2020 | vs. 4Q 2020 | 12/25/2021 4Q 2021 | 12/26/2020<br>4Q 2020 | vs. 4Q 2020 | |||||||||
| Net Sales | $ | 963,278 | $ | 798,377 | 20.7% | $ | 963,278 | $ | 798,377 | 20.7% | |||||
| Operating Income | 50,754 | 54,139 | (6.3)% | 85,555 | 68,799 | 24.4% | |||||||||
| Operating Income as a % of Net Sales | 5.3 | % | 6.8 | % | 8.9 | % | 8.6 | % | |||||||
| Net Earnings | 26,856 | 35,815 | (25.0)% | 58,751 | 46,856 | 25.4% | |||||||||
| Diluted Earnings Per Share | $ | 1.25 | $ | 1.68 | (25.6)% | $ | 2.73 | $ | 2.20 | 24.1% | |||||
| Average Shares Outstanding | 21,523 | 21,342 | 21,523 | 21,342 | |||||||||||
| Full Year 2021 | GAAP | Adjusted1 | |||||||||||||
| (000's except per share amounts) | 12/25/2021 FY 2021 | 12/26/2020<br>FY 2020 | vs. FY 2020 | 12/25/2021 FY 2021 | 12/26/2020<br>FY 2020 | vs. FY 2020 | |||||||||
| Net Sales | $ | 3,501,575 | $ | 2,895,355 | 20.9% | $ | 3,501,575 | $ | 2,895,355 | 20.9% | |||||
| Operating Income | 286,785 | 225,953 | 26.9% | 334,049 | 268,462 | 24.4% | |||||||||
| Operating Income as a % of Net Sales | 8.2 | % | 7.8 | % | 9.5 | % | 9.3 | % | |||||||
| Net Earnings | 195,630 | 140,693 | 39.0% | 234,811 | 175,302 | 33.9% | |||||||||
| Diluted Earnings Per Share | $ | 9.10 | $ | 6.57 | 38.5% | $ | 10.92 | $ | 8.18 | 33.5% | |||||
| Average Shares Outstanding | 21,493 | 21,425 | 21,493 | 21,425 |
"We achieved record sales for the second consecutive quarter through continued price management and strong market demand, while remaining highly focused on operational excellence and execution," said Stephen G. Kaniewski, President and Chief Executive Officer. "Our team delivered a solid fourth-quarter performance as we maintained our relentless focus on serving our customers in a challenging macro environment. I am very pleased with our ability to effectively manage our operations to meet growing demand despite continued wide-spread inflationary pressures and supply chain volatility. We also benefited from actions to improve productivity and control costs, which helped offset the margin impact of COVID-related labor inefficiencies and absenteeism in certain facilities during the quarter. Through these actions, we grew fourth quarter adjusted operating income 24.4 percent year-over-year and delivered adjusted diluted earnings per share growth of 26.0 percent. These results further demonstrate the value of our long-term strategy led by sustainable growth initiatives across our businesses, operational excellence and price leadership."
Kaniewski continued, "Reflecting on 2021 and our 75th year as a company, our full-year results exceeded the goals we set at the beginning of the year, despite an extraordinary business environment, demonstrating the resiliency of our global team of 11,000 employees. We achieved record net sales of $3.5 billion and delivered adjusted earnings per share of $10.92, an increase of 33.5 percent year-over-year. These results were driven by continued pricing actions, market expansion and investments in innovative technologies. We improved return on invested capital through productivity enhancements and lean efforts while strategically expanding capacity. I am extremely proud of our team and want to congratulate and thank them for their dedication, hard work, and execution. Together, we remain committed to providing our customers with vital infrastructure and solutions to advance agricultural productivity with an unwavering focus on employee safety and increasing shareholder value."
Fourth Quarter 2021 Segment Review
Infrastructure
Utility Support Structures Segment (33.6% of Sales)
Steel, concrete and composite structures for utility markets, including transmission, distribution, substations, renewable energy generation equipment
1 Please see Reg G reconciliation to GAAP measures at end of document
Sales of $324.0 million grew 19.5% year-over-year. Sales growth was driven by significantly higher pricing and higher sales of solar tracker solutions driven by utilities' continued investments in grid modernization and renewable energy markets, partially offset by lower volumes of offshore wind structures.
Global backlog of $774.0 million is indicative of the long-term market drivers of grid modernization and strengthening renewable energy markets globally.
Operating Income was $6.5 million or 2.0% of sales ($36.9 million or 11.4% adjusted1) compared to $25.6 million or 9.4% of sales ($28.0 million or 10.3% adjusted1) in 2020. GAAP operating income includes pre-tax charges of $27.9 million attributed to the offshore wind structures product line, due to an impairment of long-lived assets. Adjusted operating income increased due to favorable pricing and a more favorable mix of products.
Engineered Support Structures Segment (30.3% of Sales)
Poles, towers and components for the lighting, transportation and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products
Sales of $291.9 million increased 14.0% year-over-year led by favorable pricing and higher volumes of wireless communication products.
Lighting and transportation sales of $188.2 million increased 3.1% year-over-year, as favorable pricing and higher international sales more than offset lower volumes in North America, primarily in transportation markets.
Wireless communication products sales of $76.1 million increased 50.9% year-over-year. Higher demand globally due to wireless carriers increasing capital investments in 5G buildouts, and favorable pricing led to the sales growth.
Access Systems sales of $27.6 million increased 20.2% year-over-year, primarily due to improved end markets in Australia.
Global backlog increased more than 50.0% year-over-year to $377.0 million, indicative of continued investments in transportation infrastructure and growing demand in wireless communications markets and 5G deployment.
Operating Income improved to $29.2 million or 10.0% of sales compared to $19.2 million or 7.5% of sales ($24.4 million or 9.5% adjusted1) in 2020. Profitability improvement was driven by favorable pricing and improved fixed cost leverage, partially offset by lower North American transportation volumes.
Coatings Segment (10.2% of Sales)
Galvanizing, painting and anodizing services to preserve and protect metal products
Sales of $98.2 million increased 9.9% year-over-year due to higher average selling prices and sales from the new greenfield facility in Pittsburgh, PA that commenced operations in 2021.
Operating Income was $10.3 million or 10.5% of sales compared to $9.4 million or 10.5% of sales ($11.8 million or 13.2% adjusted1) in 2020. Profitability was impacted by operational impacts due to COVID-related labor inefficiencies, pricing actions that did not fully recover broad-based inflation, and a higher mix of internal volumes.
Agriculture
Irrigation Segment (28.7% of Sales)
Center pivots and linear irrigation equipment for agricultural markets, including parts, services, and tubular products, and advanced technology solutions for water management and precision agriculture
1 Please see Reg G reconciliation to GAAP measures at end of document
Global sales of $276.8 million increased 38.9% year-over-year due to higher average selling prices, higher volumes in all markets, particularly North America and Brazil, and higher technology sales.
North American sales of $150.5 million grew 55.1% compared to 2020. Sales growth was led by favorable pricing, higher volumes due to continued strength in agricultural markets and higher industrial tubing sales.
International sales of $126.3 million grew 23.5% year-over-year. Sales growth was led by continued strong demand in Brazil, Europe and Australia, and ongoing deliveries of the large Egypt project which commenced in the fourth quarter of 2020.
Full-year technology sales of $97.9 million increased more than 45.0% year-over-year, driven by growers' increasing demand for connected crop management and advanced analytics to reduce input costs, increase productivity and improve crop yields.
Global backlog increased 43.5% year-over-year to $471.0 million, demonstrating the underlying strength in agricultural markets globally.
Operating Income was $28.6 million, or 10.3% of sales ($33.0 million or 11.9% adjusted1) compared to $22.3 million or 11.2% of sales ($25.3 million or 12.7% adjusted1) in 2020. Operating income increased due to higher volumes and pricing actions. Operating margins were partially impacted by higher input costs that were not fully recovered by price and incremental SG&A expense from the Prospera acquisition completed in May 2021.
Non-Cash Impairment Charge on Long-Lived Assets
Valmont has previously highlighted significant, adverse challenges in the wind energy market in Northern Europe. The market environment has remained extremely competitive, despite the recent approval of protective tariffs in that region. A required impairment test in November 2021 showed that the offshore and other complex steel structures reporting unit will not generate sufficient cash flows to recover the carrying value of its long-lived assets. As a result, a $27.9 million non-cash, pre-tax impairment of customer relationship intangible asset, trade name, and property, plant, and equipment was recognized.
Balance Sheet, Liquidity and Capital Allocation
Year-to-date cash flows from operations were $65.9 million, primarily reflecting higher levels of net working capital to proactively manage supply chain volatility and support strong customer demand. At the end of the fourth quarter, cash and cash equivalents were $177.2 million. Valmont purchased $2.0 million of company stock in the fourth quarter and $121.9 million remains on the current authorization with no expiration. During the quarter, Fitch reaffirmed the Company's BBB-/Stable credit rating.
Updating Full Year 2022 Financial Outlook and Key Assumptions
The Company is increasing its 2022 full-year net sales and diluted earnings per share outlook from the previous indications that were communicated last quarter, and providing key assumptions for the year.
•Net Sales estimated to be $3.8 - $4.0 billion, an increase of 9.0% - 14.0% vs. prior year
•Unfavorable foreign currency translation impact of approximately 1.0% of Net Sales
•Diluted Earnings per Share estimated to be $11.55 - $12.30 GAAP ($12.25 - $13.00 adjusted1)
•Tax rate of approximately 25.0%
•Capital expenditures to be in the range of $110.0 - $120.0 million to support strategic growth initiatives and Industry 4.0 advanced manufacturing initiatives
Kaniewski continued, "As we turn our focus to this year, the safety and well-being of our employees remains our number one imperative, while we continue to execute and drive growth and performance. We entered 2022 from a position of strength and significant momentum in our business, with a team driven by our core values to deliver results for our stakeholders. This momentum is accelerating through the early stages of the year, and
1 Please see Reg G reconciliation to GAAP measures at end of document
we are increasing our 2022 outlook due to several positive factors. Our record backlog of more than $1.6 billion reflects strong global market demand across the portfolio, and our customers' confidence in our ability to deliver products and innovative solutions. We continue to implement pricing strategies to recover the impact of broad-based inflation. Additionally, our strong balance sheet and cash flows give us flexibility to execute our long-term strategic plan. We remain focused on long-term growth, with an emphasis on ESG principles, return on invested capital, operational excellence and recurring technology revenue. We look forward to delivering another year of strong financial performance in 2022."
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, February 17, 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 4Q and Full Year 2021 Earnings Conference Call. A slide presentation will simultaneously be available for download on the Investors page at valmont.com. A replay of the event can be accessed two hours after the call at the above link or by telephone at 1-877-660-6853 or 1-201-612-7415. Please use conference identification number 13726874. The replay will be available through 10:59 p.m. CST on February 24, 2022.
About Valmont Industries, Inc.
For over 75 years, Valmont® has been a global leader in creating vital infrastructure and advancing agricultural productivity. Today, we remain committed to doing more with less by innovating through technology. Learn more about how we’re Conserving Resources. Improving Life.® at valmont.com.
Concerning Forward-Looking Statements
This release contains forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industries in which Valmont operates, as well as management’s perceptions of historical trends, current conditions, expected future developments and other factors believed to be appropriate under the circumstances. As you read and consider this release, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties (some of which are beyond Valmont’s control) and assumptions. Although management believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Valmont’s actual financial results and cause them to differ materially from those anticipated in the forward-looking statements. These factors include among other things, the continuing and developing effects of COVID-19 including the effects of the outbreak on the general economy and the specific economic effects on the Company’s business and that of its customers and suppliers, risk factors described from time to time in Valmont’s reports to the Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company performance and financial results, operating efficiencies, availability and price of raw material, availability and market acceptance of new products, product pricing, domestic and international competitive environments, 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)
| Fourth Quarter | Year-to-Date | |||||||
|---|---|---|---|---|---|---|---|---|
| 13 Weeks Ended | Year Ended | |||||||
| 25-Dec-21 | 26-Dec-20 | 25-Dec-21 | 26-Dec-20 | |||||
| Net sales | $ | 963,278 | $ | 798,377 | $ | 3,501,575 | $ | 2,895,355 |
| Cost of sales | 740,994 | 593,796 | 2,617,686 | 2,129,841 | ||||
| Gross profit | 222,284 | 204,581 | 883,889 | 765,514 | ||||
| Selling, general and administrative expenses | 165,034 | 150,442 | 590,608 | 522,923 | ||||
| Impairment of goodwill and intangible assets | 6,496 | — | 6,496 | 16,638 | ||||
| Operating income | 50,754 | 54,139 | 286,785 | 225,953 | ||||
| Other income (expense) | ||||||||
| Interest expense | (11,146) | (10,509) | (42,612) | (41,075) | ||||
| Interest income | 298 | 443 | 1,192 | 2,374 | ||||
| Gain on investments (unrealized) | 364 | 1,341 | 1,920 | 2,443 | ||||
| Other | 2,501 | 1,724 | 12,798 | 3,073 | ||||
| Other income (expense), net | (7,983) | (7,001) | (26,702) | (33,185) | ||||
| Earnings before income taxes | 42,771 | 47,138 | 260,083 | 192,768 | ||||
| Income tax expense | 15,092 | 10,443 | 61,414 | 49,615 | ||||
| Equity in (loss) of nonconsolidated subsidiaries | 135 | (249) | (944) | (1,004) | ||||
| Net earnings | 27,814 | 36,446 | 197,725 | 142,149 | ||||
| Less: earnings attributable to non-controlling interests | (958) | (631) | (2,095) | (1,456) | ||||
| Net earnings attributable to Valmont Industries, Inc. | $ | 26,856 | $ | 35,815 | $ | 195,630 | $ | 140,693 |
| Average shares outstanding (000's) - Basic | 21,227 | 21,184 | 21,193 | 21,315 | ||||
| Earnings per share - Basic | $ | 1.27 | $ | 1.69 | $ | 9.23 | $ | 6.60 |
| Average shares outstanding (000's) - Diluted | 21,523 | 21,342 | 21,493 | 21,425 | ||||
| Earnings per share - Diluted | $ | 1.25 | $ | 1.68 | $ | 9.10 | $ | 6.57 |
| Cash dividends per share | $ | 0.500 | $ | 0.450 | $ | 2.000 | $ | 1.800 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(unaudited)
| Fourth Quarter | Year-to-Date | |||||||
|---|---|---|---|---|---|---|---|---|
| 13 Weeks Ended | Year Ended | |||||||
| 25-Dec-21 | 26-Dec-20 | 25-Dec-21 | 26-Dec-20 | |||||
| Net sales | ||||||||
| Utility Support Structures | $ | 324,012 | $ | 271,031 | $ | 1,121,510 | $ | 1,002,209 |
| Engineered Support Structures | 291,948 | 256,057 | 1,064,761 | 995,840 | ||||
| Coatings | 98,182 | 89,336 | 386,313 | 345,312 | ||||
| Infrastructure products | 714,142 | 616,424 | 2,572,584 | 2,343,361 | ||||
| Irrigation | 276,757 | 199,263 | 1,028,717 | 645,831 | ||||
| Less: Intersegment sales | (27,621) | (17,310) | (99,726) | (93,837) | ||||
| Total | $ | 963,278 | $ | 798,377 | $ | 3,501,575 | $ | 2,895,355 |
| Operating Income | ||||||||
| Utility Support Structures | $ | 6,456 | $ | 25,600 | $ | 67,624 | $ | 100,855 |
| Engineered Support Structures | 29,182 | 19,159 | 115,417 | 65,342 | ||||
| Coatings | 10,347 | 9,357 | 50,365 | 42,975 | ||||
| Infrastructure products | 45,985 | 54,116 | 233,406 | 209,172 | ||||
| Irrigation | 28,560 | 22,345 | 137,027 | 83,046 | ||||
| Corporate | (23,791) | (22,322) | (83,648) | (66,265) | ||||
| Total | $ | 50,754 | $ | 54,139 | $ | 286,785 | $ | 225,953 |
The backlog of orders for the principal products manufactured and marketed was $1,621.9 million at the end of the 2021 fiscal year and $1,139.1 million at the end of the 2020 fiscal year. An order is reported in our backlog upon receipt of a purchase order from the customer or execution of a sales order contract. We anticipate that most of the 2021 backlog of orders will be filled during fiscal year 2022 . At year-end, the segments with backlog were as follows (dollar amounts in millions):
| 12/25/2021 | 12/26/2020 | |||
|---|---|---|---|---|
| Engineered Support Structures | $ | 376.9 | $ | 247.1 |
| Utility Support Structures | 773.9 | 563.3 | ||
| Irrigation | 471.0 | 328.3 | ||
| Coatings | 0.1 | 0.4 | ||
| $ | 1,621.9 | $ | 1,139.1 |
Valmont has aggregated its business segments into four global reportable segments as follows.
Utility Support Structures: This segment consists of the manufacture of steel, concrete and composite structures for utility markets, including transmission, distribution, substations, renewable energy generation equipment
Engineered Support Structures: This segment consists of the manufacture and distribution of poles, towers and components for the lighting, transportation and wireless communication markets, engineered access systems, integrated structure solutions for smart cities, and highway safety products.
Coatings: This segment consists of global galvanizing, painting and anodizing services to preserve and protect metal products.
Irrigation: This segment consists of the global manufacture of center pivots and linear irrigation equipment for agricultural markets, including, parts, services, and tubular products, and advanced technology solutions for water management and precision agriculture
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
| 25-Dec-21 | 26-Dec-20 | |||
|---|---|---|---|---|
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 177,232 | $ | 400,726 |
| Accounts receivable, net | 571,593 | 511,714 | ||
| Inventories | 728,834 | 448,941 | ||
| Contract asset - costs and profits in excess of billings | 142,643 | 123,495 | ||
| Prepaid expenses and other assets | 83,646 | 59,804 | ||
| Refundable income taxes | 8,815 | 9,945 | ||
| Total current assets | 1,712,763 | 1,554,625 | ||
| Property, plant and equipment, net | 598,605 | 597,727 | ||
| Goodwill and other assets | 1,135,881 | 800,808 | ||
| $ | 3,447,249 | $ | 2,953,160 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Current installments of long-term debt | $ | 4,884 | $ | 2,748 |
| Notes payable to banks | 13,439 | 35,147 | ||
| Accounts payable | 347,841 | 268,099 | ||
| Accrued expenses | 253,330 | 227,735 | ||
| Contract liability - billings in excess of costs and earnings | 135,746 | 130,018 | ||
| Dividend payable | 10,616 | 9,556 | ||
| Total current liabilities | 765,856 | 673,303 | ||
| Long-term debt, excluding current installments | 947,072 | 728,431 | ||
| Operating lease liabilities | 147,759 | 80,202 | ||
| Other long-term liabilities | 172,965 | 263,388 | ||
| Shareholders' equity | 1,413,597 | 1,207,836 | ||
| $ | 3,447,249 | $ | 2,953,160 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| Fourth Quarter | ||||
|---|---|---|---|---|
| 52 Weeks Ended | ||||
| 25-Dec-21 | 26-Dec-20 | |||
| Cash flows from operating activities | ||||
| Net Earnings | $ | 197,725 | $ | 142,149 |
| Depreciation and amortization | 92,577 | 82,892 | ||
| Impairment of long-lived assets | 27,911 | 20,389 | ||
| Contribution to defined benefit pension plan | (1,924) | (35,399) | ||
| Change in working capital | (284,739) | 52,282 | ||
| Other | 34,388 | 53,981 | ||
| Net cash flows from operating activities | 65,938 | 316,294 | ||
| Cash flows from investing activities | ||||
| Purchase of property, plant, and equipment | (107,790) | (106,700) | ||
| Acquisitions | (312,500) | (15,862) | ||
| Other | 2,982 | 18,533 | ||
| Net cash flows from investing activities | (417,308) | (104,029) | ||
| Cash flows from financing activities | ||||
| Proceeds from long-term borrowings | 312,485 | 88,872 | ||
| Principal payments on long-term borrowings | (91,313) | (121,665) | ||
| Net payments on short-term borrowings | (20,241) | 13,044 | ||
| Purchase of treasury shares | (26,100) | (56,491) | ||
| Purchase of noncontrolling interest | — | (59,416) | ||
| Dividends paid | (41,412) | (36,930) | ||
| Other | 81 | (1,170) | ||
| Net cash flows from financing activities | 133,500 | (173,756) | ||
| Effect of exchange rates on cash and cash equivalents | (5,624) | 8,675 | ||
| Net change in cash and cash equivalents | (223,494) | 47,184 | ||
| Cash and cash equivalents - beginning of year | 400,726 | 353,542 | ||
| Cash and cash equivalents - end of period | $ | 177,232 | $ | 400,726 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS
REGULATION G RECONCILIATION
(Dollars in thousands, except per share amounts)
(unaudited)
The non-GAAP tables below disclose the impact of 1) the nonrecurring impairment of long-lived assets for the offshore and other steel structures reporting unit (SM) 2) intangible asset amortization and stock-based compensation recognized on the Prospera subsidiary, 3) a write off a receivable following arbitration of a commercial transaction from 2014, 4) acquisition diligence, 5) severance expenses on segment operating income and net earnings and 6) the impact of the U.K. tax rate change on net earnings (adjusts statutory tax rate from 19% to 25%). Amounts may be impacted by rounding. We believe the adjustments for Prospera allow for a better comparison of future Irrigation segment performance as compared to historical results. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP measures.
| Thirteen weeks ended December 25, 2021 | Diluted | Year ended December 25, 2021 | Diluted | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| earnings per | earnings per | |||||||||
| share | share | |||||||||
| Net earnings attributable to Valmont Industries, Inc. - as reported | $ | 26,856 | $ | 1.25 | $ | 195,630 | $ | 9.10 | ||
| Impairment of long-lived assets - Offshore structures (SM) | 27,911 | 1.30 | 27,911 | 1.30 | ||||||
| Prospera intangible asset amortization | 1,470 | 0.07 | 3,396 | 0.16 | ||||||
| Stock-based compensation - Prospera subsidiary | 2,928 | 0.14 | 5,240 | 0.24 | ||||||
| Write-off of a receivable, pre-tax | — | — | 5,545 | 0.26 | ||||||
| Acquisition diligence expense, pre-tax | — | — | 1,120 | 0.05 | ||||||
| Severance expense, pre-tax | 2,492 | 0.12 | 4,052 | 0.19 | ||||||
| Total Adjustments, pre-tax1 | 34,801 | 1.62 | 47,264 | 2.20 | ||||||
| Change in U.K. statutory tax rate | — | — | (2,819) | (0.13) | ||||||
| Valuation allowance against Offshore structures (SM) tax assets | 5,076 | 0.24 | 5,076 | 0.24 | ||||||
| Tax effect of adjustments2 | (7,982) | (0.37) | (10,340) | (0.48) | ||||||
| Net earnings attributable to Valmont Industries, Inc. - Adjusted1 | $ | 58,751 | $ | 2.73 | $ | 234,811 | $ | 10.92 | ||
| Average shares outstanding (000’s) - Diluted | 21,523 | 21,493 |
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 December 25, 2021 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating Income Reconciliation | Engineered Support Structures | Utility Support Structures | Coatings | Irrigation | Corporate | Valmont | |||||||||||
| Operating income - as reported | $ | 29,182 | $ | 6,456 | $ | 10,347 | $ | 28,560 | $ | (23,791) | $ | 50,754 | |||||
| Impairment of long-lived assets - Offshore structures (SM) | — | 27,911 | — | — | — | 27,911 | |||||||||||
| Stock-based compensation - Prospera subsidiary | — | — | — | 2,928 | — | 2,928 | |||||||||||
| Prospera intangible asset amortization | — | — | — | 1,470 | — | 1,470 | |||||||||||
| Severance expense, pre-tax | 2,492 | — | — | — | 2,492 | ||||||||||||
| Adjusted Operating Income | $ | 29,182 | $ | 36,859 | $ | 10,347 | $ | 32,958 | $ | (23,791) | $ | 85,555 | |||||
| Net Sales - as reported | 291,948 | 324,012 | 98,182 | 276,757 | NM | 963,278 | |||||||||||
| Operating Income as a % of Sales | 10.0 | % | 2.0 | % | 10.5 | % | 10.3 | % | NM | 5.3 | % | ||||||
| Adjusted Operating Income as a % of Sales | 10.0 | % | 11.4 | % | 10.5 | % | 11.9 | % | NM | 8.9 | % | ||||||
| Fifty-two weeks ended December 25, 2021 | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Operating Income Reconciliation | Engineered Support Structures | Utility Support Structures | Coatings | Irrigation | Corporate | Valmont | |||||||||||
| Operating income - as reported | $ | 115,417 | $ | 67,624 | $ | 50,365 | $ | 137,027 | $ | (83,648) | $ | 286,785 | |||||
| Impairment of long-lived assets - Offshore structures (SM) | — | 27,911 | — | — | — | 27,911 | |||||||||||
| Prospera intangible asset amortization | — | — | — | 3,396 | — | 3,396 | |||||||||||
| Stock-based compensation - Prospera subsidiary | — | — | — | 5,240 | — | 5,240 | |||||||||||
| Write off a receivable, pre-tax | — | 5,545 | — | — | — | 5,545 | |||||||||||
| Acquisition diligence expense, pre-tax | — | — | — | — | 1,120 | 1,120 | |||||||||||
| Severance expense, pre-tax | — | 3,142 | — | 910 | — | 4,052 | |||||||||||
| Adjusted Operating Income | $ | 115,417 | $ | 104,222 | $ | 50,365 | $ | 146,573 | $ | (82,528) | $ | 334,049 | |||||
| Net Sales - as reported | 1,064,761 | 1,121,510 | 386,313 | 1,028,717 | NM | 3,501,575 | |||||||||||
| Operating Income as a % of Sales | 10.8 | % | 6.0 | % | 13.0 | % | 13.3 | % | NM | 8.2 | % | ||||||
| Adjusted Operating Income as a % of Sales | 10.8 | % | 9.3 | % | 13.0 | % | 14.2 | % | NM | 9.5 | % |
The non-GAAP tables below disclose the impact of impairment of goodwill, tradenames, and a facility, restructuring costs on segment operating income and net earnings as well as the impact of the U.K. tax rate change on net earnings (adjusts statutory tax rate from 17% to 19%). Amounts may be impacted by rounding. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP measures for the second quarter and first half of fiscal 2020.
| Thirteen weeks ended December 26, 2020 | Diluted | Fifty-two weeks ended December 26, 2020 | Diluted | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
| earnings per | earnings per | |||||||||
| share | share | |||||||||
| Net earnings attributable to Valmont Industries, Inc. - as reported | $ | 35,815 | $ | 1.68 | $ | 140,693 | $ | 6.57 | ||
| Impairment of goodwill and tradename, pre-tax | — | — | 16,638 | 0.78 | ||||||
| Restructuring and related asset impairment costs - pre-tax | 14,660 | 0.69 | 25,871 | 1.21 | ||||||
| Total Adjustments | 14,660 | 0.69 | 42,509 | 1.98 | ||||||
| Tax effect of adjustments * | (3,619) | (0.17) | (6,372) | (0.30) | ||||||
| UK tax rate change | — | — | (1,528) | (0.07) | ||||||
| Net earnings attributable to Valmont Industries, Inc. - Adjusted | $ | 46,856 | $ | 2.20 | $ | 175,302 | $ | 8.18 | ||
| Average shares outstanding (000’s) - Diluted | 21,342 | 21,425 |
* The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.
| Thirteen weeks ended December 26, 2020 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Operating Income Reconciliation | Engineered Support Structures | Utility Support Structures | Coatings | Irrigation | Corporate | Valmont | |||||||||||
| Operating income - as reported | $ | 19,159 | $ | 25,600 | $ | 9,357 | $ | 22,345 | $ | (22,322) | $ | 54,139 | |||||
| Restructuring and related asset impairment costs | 5,220 | 2,388 | 2,445 | 2,968 | 1,639 | 14,660 | |||||||||||
| Adjusted Operating Income | $ | 24,379 | $ | 27,988 | $ | 11,802 | $ | 25,313 | $ | (20,683) | $ | 68,799 | |||||
| Net Sales - as reported | 256,057 | 271,031 | 89,336 | 199,263 | NM | 798,377 | |||||||||||
| Operating Income as a % of Sales | 7.5 | % | 9.4 | % | 10.5 | % | 11.2 | % | NM | 6.8 | % | ||||||
| Adjusted Operating Income as a % of Sales | 9.5 | % | 10.3 | % | 13.2 | % | 12.7 | % | NM | 8.6 | % | ||||||
| Fifty-two weeks ended December 26, 2020 | |||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Operating Income Reconciliation | Engineered Support Structures | Utility Support Structures | Coatings | Irrigation | Corporate | Valmont | |||||||||||
| Operating income - as reported | $ | 65,342 | $ | 100,855 | $ | 42,975 | $ | 83,046 | $ | (66,265) | $ | 225,953 | |||||
| Impairment of goodwill and tradename | 16,638 | — | — | — | — | 16,638 | |||||||||||
| Restructuring and related asset impairment costs | 7,584 | 9,363 | 3,951 | 2,968 | 2,005 | 25,871 | |||||||||||
| Adjusted Operating Income | $ | 89,564 | $ | 110,218 | $ | 46,926 | $ | 86,014 | $ | (64,260) | $ | 268,462 | |||||
| Net Sales - as reported | 995,840 | 1,002,209 | 345,312 | 645,831 | NM | 2,895,355 | |||||||||||
| Operating Income as a % of Sales | 6.6 | % | 10.1 | % | 12.4 | % | 12.9 | % | NM | 7.8 | % | ||||||
| Adjusted Operating Income as a % of Sales | 9.0 | % | 11.0 | % | 13.6 | % | 13.3 | % | NM | 9.3 | % |
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 technology intangible asset (Prospera Technologies) and (2) share-based compensation for Prospera employees. We believe the adjustments for Prospera allow for a better comparison of future Irrigation segment performance as compared to historical results. We believe it is useful when considering company performance for the non-GAAP adjusted net earnings to be taken into consideration by management and investors with the related reported GAAP measures.
| Reconciliation of Range of Net Earnings - 2022 Guidance | Low End | High End | Adjustments | |||
|---|---|---|---|---|---|---|
| Estimated net earnings - GAAP | $ | 249,750 | $ | 266,250 | ||
| Prospera intangible asset (proprietary technology) amortization, pre-tax | 6,950 | |||||
| Share-based compensation - Prospera (ML & AI subsidiary), pre-tax | 10,000 | |||||
| Total pre-tax adjustments | 16,950 | |||||
| Estimated tax benefit from above expenses* | (2,200) | |||||
| Total Adjustments, after-tax | $ | 14,750 | ||||
| Estimated net earnings - Adjusted | $ | 264,500 | $ | 281,000 | ||
| Diluted Earnings Per Share Range - GAAP | $ | 11.55 | $ | 12.30 | ||
| Diluted Earnings Per Share Range - Adjusted | $ | 12.25 | $ | 13.00 |
* The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.
vmi_2021q4xpresentation
© 2021 Valmont® Industries, Inc. Valmont Industries, Inc. Fourth Quarter and Full Year 2021 Earnings Presentation February 17, 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 factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by the Company and its subsidiaries including the continuing and developing effects of COVID-19 including the effects of the outbreak on the general economy and the specific economic effects on the Company’s business and that of its customers and suppliers, competitor responses to the Company’s products and services, the overall market acceptance of such products and services, the integration of acquisitions and other factors disclosed in the Company’s periodic reports filed with the Securities and Exchange Commission. Consequently, such forward-looking statements should be regarded as the Company’s current plans, estimates and beliefs. The Company does not undertake and specifically declines any obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. February 17, 20222 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation
| Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 20223 STEVE KANIEWSKI PRESIDENT & CHIEF EXECUTIVE OFFICER
4Q 2021 Segment Sales and Segment Summaries February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation4 Significant Irrigation Revenue Growth • Led by substantially higher pricing and strong underlying demand • Continuing to invest in upgrading and hardening the grid • Increasing investments for renewable energy generation drove higher solar tracker sales • Making strategic investments in capacity and technology to meet growing demand • Favorable pricing in all markets • More than 50% sales growth in wireless communication products • International markets benefiting from higher stimulus and infrastructure investments • Wireless communications demand driven by 5G buildouts and significant investments by the major wireless carriers • Higher average selling prices • Improved general end-market demand • Sales from new greenfield facility in Pittsburgh • North America sales grew more than 55% YoY • Strength in all regions with international sales growing 23% YoY and record sales in Brazil • Higher sales of technology solutions • Positive farmer sentiment driven by strong underlying market fundamentals and net farm income projections SEGMENT SUMMARIES TOTAL 4Q 2021 SALES: $963.3M $324.0M $291.9M $98.2M $276.8M Utility Support Structures Engineered Support Structures Coatings Irrigation N.A.: $150.5M | International: $126.3M 33.6% of Sales 30.3% of Sales 10.2% of Sales 28.7% of Sales
Full Year 2021 Segment Sales and Segment Summaries February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation5 Considerable Sales Growth in All Segments • Sales growth driven by significantly higher pricing • Continued robust demand driven by grid resiliency and renewables • Sales growth despite lower transportation volumes in North America • Relentless focus on pricing actions and improved operational performance • Wireless communication products grew 26% YoY to $240 million • Improved industrial production levels globally • Positively impacted by favorable pricing, higher volumes and favorable currency impacts • Record sales, up 59% YoY • Technology sales grew 45% YoY to $98 million • Grain commodity prices remained elevated during the year • 2021 net farm income levels estimated to be $120B, the highest level since 2013 • Demand driven by food security, resource conservation and reduction of input costs SEGMENT SUMMARIES TOTAL FY 2021 SALES: $3,501.6 M $1,121.5M $1,064.8M $386.3M $1,028.7M Utility Support Structures Engineered Support Structures Coatings Irrigation N.A.: $545.6M | International: $483.1M 32.0% of Sales 30.4% of Sales 11.0% of Sales 29.4% of Sales
6 Advancing our ESG Strategy and Communication with the Release of our 2022 Sustainability Report February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation Elevated ESG to a Top Strategic Imperative Alignment to New Frameworks Improvement in ISS scores for Environment and Social Release our 2022 Sustainability Report in late March, followed by dedicated ESG conference call Launched a Dedicated Sustainability Website
AVNER APPLBAUM EVP & CHIEF FINANCIAL OFFICER | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 20227
4Q 2021 Financial Summary February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation8 Sales Operating Income Diluted EPS GAAP Adjusted1 GAAP Adjusted1 20.7% (6.1%) 24.4% (25.6%) 24.1% • Higher volumes in Irrigation and favorable pricing, in both Engineered Support Structures and Utility Support Structures • Record year-end backlog of more than $1.6 billion, an increase of more than 40% YoY, and an increase of more than 5% since the end of Q3 • Operating income of 5.3% of sales (8.9% adjusted1) • Driven by higher volumes in Irrigation and favorable pricing, notably in Engineered Support Structures • GAAP tax rate was higher due to recognizing a $5.0 million valuation allowance against deferred tax assets for the wind structures product line • Tax rate on an adjusted basis was lower, driven by a more favorable geographic mix of earnings and certain tax planning strategies $M, except for per share amounts $50.8 $54.1 $85.6 $68.8 2021 2020 2021 2020 $963.3 $798.4 2021 2020 $1.25 $1.68 $2.73 $2.20 2021 2020 2021 2020 1 Please see Reg G reconciliation to GAAP measures at end of document.
Sales Operating Income1 19.6% 4Q 2021 Results | Utility Support Structures 9 ($M) Key Statistics 2020 Sales $ 271.0 Intersegment Sales 7.3 Volume 6.7 Pricing/Mix 41.3 Acquisitions/Divestiture - Currency Translation (2.3) 2021 Sales $ 324.0 $324.0 $271.0 2021 2020 COMMENTARY • Adjusted operating income of $36.9 million, or 11.4% of sales • Increased 110 basis points compared to last year as the benefits of pricing through contractual mechanisms became more aligned with raw material costs • Required impairment test which resulted in a non-cash, pre-tax impairment of $27.9 million related to long-lived assets − Clarifying information on the tariff rate that the European Union would impose on imports of steel wind towers received during fourth quarter − Local management team has taken strategic actions to reduce costs and increase gross profit; actions expected to limit anticipated losses in 2022 February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation $6.5 $36.9 $25.6 $28.0 2021 2021 Adj. 2020 2020 Adj. 1 Please see Reg G reconciliation to GAAP measures at end of document.
Sales Operating Income1 14.0% 4Q 2021 Results | Engineered Support Structures February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation10 ($M) $291.9 $256.1 2021 2020 $29.2 $19.2 $24.4 2021 2020 2020 Adj. COMMENTARY • Operating income of $29.2 million, or 10.0% of sales, increased 50 basis points compared to last year • We continued to benefit from pricing actions which more than offset the impacts of cost inflation • Fixed cost leverage, including SG&A, also contributed to positive results • Full-year operating margins of 10.8% of sales, an improvement of 180 basis points YoY • Wireless communication sales grew 50.9% to $76.1 million Key Statistics 2020 Sales $ 256.1 Intersegment Sales (3.7) Volume (6.7) Pricing/Mix 47.1 Acquisitions/Divestiture - Currency Translation (0.9) 2021 Sales $ 291.9 1 Please see Reg G reconciliation to GAAP measures at end of document.
4Q 2021 Results | Coatings February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation11 ($M) COMMENTARY • Operating income of $10.3 million, or 10.5% of sales, decreased 270 basis points compared to last year • Profitability was impacted by a lag in pricing to recover higher cost inflation, including raw materials and labor, operational impacts due to COVID- related labor inefficiencies in many of our facilities and a higher mix of internal volumes compared to last year Key Statistics 2020 Sales $ 89.3 Intersegment Sales 3.5 Volume (3.1) Pricing/Mix 7.6 Acquisitions/Divestiture 0.7 Currency Translation 0.2 2021 Sales $ 98.2 Sales Operating Income1 10.0% $98.2 $89.3 2021 2020 $10.3 $9.4 $11.8 2021 2020 2020 Adj. 1 Please see Reg G reconciliation to GAAP measures at end of document.
Sales Operating Income1 55.0% 23.6% 4Q 2021 Results | Irrigation February 17, 202212 ($M) $28.6 $33.0 $22.3 $25.3 2021 2021 Adj. 2020 2020 Adj.2021 2020 $150.5 $126.3 $97.1 $102.2 North America International | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation Key Statistics 2020 Sales $ 199.3 Intersegment Sales 3.2 Volume 22.4 Pricing/Mix 51.1 Acquisitions/Divestiture 1.6 Currency Translation (0.8) 2021 Sales $ 276.8 1 Please see Reg G reconciliation to GAAP measures at end of document. COMMENTARY • Adjusted operating income of $33.0 million, or 11.9% of sales, decreased 80 basis points compared to last year • Profitability improvement from higher volumes and the benefit of continued pricing actions more than offset by higher input costs that were not fully recovered by price, and incremental SG&A expense from the Prospera acquisition completed in May 2021 • Full-year technology sales of $97.9 million increased more than 45.0% YoY, driven by growers' increasing demand for connected crop management and advanced analytics to reduce input costs, increase productivity and improve crop yields
2021 Cash Flow Highlights February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation13 Strategically Securing Raw Material to Support Strong Sales Growth ($M) YTD 12/25/2021 Net Cash Flows from Operating Activities $ 65.9 Net Cash Flows from Investing Activities (417.3) Net Cash Flows from Financing Activities 133.5 Net Cash Flows from Operating Activities $ 65.9 Purchase of Property, Plant & Equipment (107.8) Free Cash Flows $ (41.9) 2021 Cash Flow | FCF Reconciliation Cash and Debt Highlights $177.2M ($169.5M ex-U.S.) Cash at 12/25/2021 $947.1M Total Long-term Debt at 12/25/2021
Balanced Approach to Capital Allocation February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation14 $108 $313 $26 $41 Capital Expenditures Acquisitions Share Repurchases Dividends 2021 Capital Deployment: $488M Capital Expenditures • 2021 CapEx of $108M in line with expectations • Investments to support strategic growth initiatives and Industry 4.0 advanced manufacturing Acquisitions • 2021 included Prospera Technologies and PivoTrac • Strategic fit + market expansion Share Repurchases • Opportunistic approach, supported by FCF • Repurchased 8,800 shares in 4Q at an average price of $227.22 per share • ~$122M remains on current authorization at 12/25/21 Dividends • 11% dividend increase announced February 2021 • Payout ratio target: 22% of earnings • Current payout: ~18% G ro w in g O u r B u s in e s s R e tu rn in g C a s h t o S h a re h o ld e rs
Strong Balance Sheet and Liquidity February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation15 Cash $177.2M Total Long-Term Debt $947.1M Shareholders’ Equity $1,413.6M Total Debt to Adj. EBITDA1 1.9x Available Credit under Revolving Credit Facility2 $590.5M Cash $177.2M Total Available Liquidity $767.7M AS OF DECEMBER 25, 20211 ► Long-term debt of $947.1M, mostly fixed-rate, with long-dated maturities to 2044 and 2054 ► Fitch reaffirmed BBB-/Stable credit rating during Q4 ► Capital allocation strategy has not changed, with a balanced approach of deploying capital to grow our business and returning cash to shareholders − Purchased $2.0M of company stock in Q4, and ~$122M remains on current authorization 1 The values on this slide are calculated in accordance with the amended credit facility dated October 18, 2021. See slide 30 for calculation of Adjusted EBITDA and Leverage Ratio. 2 $800M Total Revolver less borrowings and Standby LC’s of $184M.
Full Year 2022 Outlook and Key Assumptions 16 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022 KEY ASSUMPTIONS • Unfavorable foreign currency translation impact of ~1.0% of Net Sales • Continue implementing additional price actions as needed across our businesses to offset cost increases • Stabilized steel costs for the year • Expect ~25% full year tax rate due to the expected geographic mix of earnings and the benefits of certain tax planning strategies realized in prior years • CapEx to support strategic growth initiatives and Industry 4.0 advanced manufacturing initiatives $3.8B – $4.0B Net Sales 1 Exclusive of potential future restructuring activities. 2 Please see Reg G reconciliation to GAAP measures at end of document. ~25% Tax Rate 9% – 14% Increase in Net Sales YoY $11.55 – $12.30 GAAP Diluted EPS $110.0M – $120.0M Capital Expenditures FY22 OUTLOOK1 $12.25 – $13.00 Adj. Diluted EPS2
Fundamental Market Drivers Remain Resilient 17 Record Backlog of More than $1.6B at the End of 2021 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022 COATINGS IRRIGATION • Closely following industrial production trends • Global preservation of critical infrastructure over long-term • Increased number of economies actively fighting costs of corrosion will drive need to extend life of steel products globally over long- term • Fits well within ESG principles • Global ag market fundamentals remain strong • Net farm income improvements are driving positive farmer sentiment • Improved demand along with strength across international markets • Critical need for infrastructure investment provides very good economic stimulus • Solid long-term market trends for road construction and single-family housing • Carriers’ investments support work and school-at-home and macro buildouts in suburban and rural communities, aligning with favorable trends in residential construction • Strong backlog demonstrates ongoing demand and necessity for renewables, grid hardening and expanding ESG focus within utility industry • Well-positioned to be a preferred strategic partner with utilities and developers for their renewable energy goals ESSUSS
2022 Segment Outlook February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation18 Positive Momentum Across All Businesses USS • Expect margin improvement from strong market demand and the benefit of previous pricing actions • Backlog indicative of long-term market drivers of grid resiliency and the increasing use of renewable energy ESS • Stable market conditions in North American transportation markets; order rates are continuing to improve • Demand for wireless communication products remains very strong with 5G buildouts accelerating • Long-term need for critical infrastructure investment globally, including current and future stimulus, will continue to benefit global markets giving us confidence in future growth COATINGS • Trending in-line with industrial production levels • Remain focused on pricing actions to recover cost inflation of zinc and other broad-based inflationary items IRRIGATION • Favorable market trends globally and a solid international project pipeline providing strong momentum • Expect a strong year based on strength of global underlying agriculture fundamentals
Ability to grow sales through innovation and execution while being flexible and responding quickly to meet customer needs Increased operating income by executing on our pricing strategies and advancing operational excellence across our footprint Invested in our employees and technology to drive new products and services, build upon the strength of our operations Building on this momentum as we enter 2022 with a focus on execution, serving our customers, and ESG principles while investing for growth, generating positive operating cash flow and improving return on invested capital Summary 19 Poised and Well Positioned to Capture Growth and Drive Stakeholder Value in the Future | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022 01 02 03 04
Q&A 20 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022
APPENDIX 21 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022
Full Year 2021 Financial Summary February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation22 Sales Operating Income Diluted EPS GAAP Adjusted1 GAAP Adjusted1 20.9% 26.9% 24.4% 38.5% 33.5% • Sales growth in all segments • Led by Irrigation which grew 59.3% to a record $1.03B • Operating income of 8.2% of sales (9.5% adjusted1) • Led by favorable pricing and higher volumes • Significant volume growth in Irrigation • Operating margins of nearly 11% in Engineered Support Structures • EPS increased $2.53 or 38.5% on a GAAP basis • Increased $2.74, or 33.5% on an adjusted basis • Capital expenditures were $108.0 million, including approximately $45.0 million for strategic investments $M, except for per share amounts $286.8 $226.0 $334.0 $268.5 2021 2020 2021 2020 $3,501.6 $2,895.4 2021 2020 $9.10 $6.57 $10.92 $8.18 2021 2020 2021 2020 1 Please see Reg G reconciliation to GAAP measures at end of document.
4Q and Full Year 2021 Financial Summary 23 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022 Net Sales 2021 2020 Change YTD 2021 YTD 2020 Change Utility Support Structures $ 324.0 $ 271.0 19.6% $ 1,121.5 $ 1,002.2 11.9% Engineered Support Structures 291.9 256.1 14.0% 1,064.8 995.8 6.9% Coatings 98.2 89.3 10.0% 386.3 345.3 11.9% Irrigation 276.8 199.3 38.9% 1,028.7 645.8 59.3% Intersegment Sales1 (27.6) (17.3) NM (99.7) (93.7) NM Net Sales $ 963.3 $ 798.4 20.7% $ 3,501.6 $ 2,895.4 20.9% Operating Income $ 50.8 $ 54.1 (6.1%) $ 286.8 $ 226.0 26.9% Adjusted Operating Income2 $ 85.6 $ 68.8 24.4% $ 334.0 $ 268.5 24.4% Net Income $ 26.9 $ 35.8 (24.9%) $ 195.6 $ 140.7 39.0% Adjusted Net Income $ 58.8 $ 46.9 25.4% $ 234.8 $175.3 33.9% Diluted Earnings Per Share (EPS) $ 1.25 $ 1.68 (25.6%) $ 9.10 $ 6.57 38.5% Adj Diluted Earnings Per Share (EPS)2 $ 2.73 $ 2.20 24.1% $ 10.92 $ 8.18 33.5% $M, except for per share amounts .1Includes rounding 2Please see Reg G reconciliation to GAAP measures at end of document..
Steel Material Index Trends 2020-2021 YTD 24 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022 Source: FastMarketsAMM.
State Transportation Investment Funding Measures 25 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022 Source:(10/18/21) Transportation Investment Advocacy Center.
State Transportation Investment Funding Measures by Type and State 26 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022 Source: Transportation Investment Advocacy Center. Increased Fuel Tax Electric Vehicle Fee Road Usage Fee
5G Adoption and Capex Spend Forecasts 27 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022 Source: GSM Association.
U.S. Net Cash Farm Income by Year February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation28 Source: USDA, American Farm Bureau Federation
2012-2021 Historical Free Cash Flow1 February 17, 2022 | Valmont Industries, Inc. | 4Q and Full Year Earnings Presentation29 10 Year Average FCF is $143M; Last 5 Years Has Averaged $107M 1 Adjusted earnings for purposes of calculating FCF conversion may not agree to the adjusted net earnings. The difference is due to cash restructuring, debt refinancing, or other non-recurring expenses which were settled in cash in the year of occurrence. ($M) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Net cash flows from operating activities $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 Net cash flows from investing activities (136.7) (131.7) (256.9) (48.2) (53.0) (49.6) (155.4) (168.1) (104.0) (417.3) Net cash flows from financing activities (16.4) (37.4) (136.8) (32.0) (95.2) (32.0) (162.1) (98.9) (173.8) 133.5 Net cash flows from operating activities $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 Purchase of plant, property, and equipment (97.1) (106.8) (73.0) (45.5) (57.9) (55.3) (72.0) (97.4) (106.7) (107.8) Free Cash flows 100.0 289.7 101.1 226.8 174.9 77.8 81.0 210.2 209.6 (41.9) Net earnings attributed to Valmont Industries, Inc. $ 234.1 $ 278.5 $ 183.9 $ 40.1 $ 175.5 $ 120.5 $ 101.8 $ 146.4 $ 140.7 $ 195.6 Adjusted net earnings attributed to Valmont Industries, Inc. N/A $ 295.1 $ 187.7 $ 131.7 $ 139.9 $ 162.7 $ 130.4 N/A $ 159.8 $ 222.3 Free Cash Flow Conversion - GAAP 0.43 1.04 0.55 5.66 1.00 0.65 0.80 1.44 1.49 (0.21) Free Cash Flow Conversion - Adjusted N/A 0.98 0.53 1.71 1.25 0.48 0.62 N/A 1.31 (0.19) 1) Reconciliation of Net Earnings to Adjusted Figures Net earnings attributed to Valmont Industries, Inc. $ 234.1 $ 278.5 $ 183.9 $ 40.1 $ 175.5 $ 120.5 $ 101.8 $ 146.4 $ 140.7 $ 195.6 Change in valuation allowance against deferred tax assets - - - 7.1 (20.7) 41.9 - - - 5.0 Impairment of long-lived assets - 12.2 - 61.8 1.1 - 28.6 - 19.1 21.7 Reversal of contingent liability - - - (16.6) - - - - - Other non-recurring expenses (non-cash) - - - 18.1 - - - - Deconsolidation of Delta EMD, after-tax and NCI - 4.4 - - - - - - - - Noncash loss from Delta EMD shares - - 3.8 4.6 0.6 0.2 - - - - Adjusted net earnings attributed to Valmont Industries, Inc. $ 234.1 $ 295.1 $ 187.7 $ 131.7 $ 139.9 $ 162.7 $ 130.4 $ 146.4 $ 159.8 $ 222.3
Years of rapid raw material cost inflation GAAP 0.43X 1.04X 0.55X 5.66X 1.01X 0.67X 0.86X 1.37X 1.49X (0.21X) Adj. N/A 0.98X 0.53X 1.71X 1.27X 0.49X 0.66X N/A 1.28X (0.19X) 2012 – 2021 Free Cash Flow1 ($M) 100 290 101 227 175 78 81 210 210 (42) 143 (100) (50) - 50 100 150 200 250 300 350 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 10 Year Avg 10-yr Avg. $143M GAAP 1.28X Adj. 0.84X Historical FCF Conversion by Year1 Strong Free Cash Flow throughout the Cycle 30 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022 1 We use the non-GAAP measure of FCF, which we define as GAAP net cash flows from operating activities reduced by capex. We believe that FCF is a useful performance measure for management and useful to investors as the basis for comparing our performance with other companies. Our measure of FCF may not be directly comparable to similar measures used by other companies.
Calculation of Adjusted EBITDA and Leverage Ratio 31 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022 Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior four quarters. See “Leverage Ratio “ below. TTM 25-Dec-21 Net earnings attributable to Valmont Industries, Inc. $ 195,630 Interest expense 42,612 Income tax expense 61,414 Stock-based compensation 28,720 Depreciation and amortization expense 92,577 EBITDA 420,953 Asset impairments 27,911 Adjusted EBITDA – last four quarters $ 448,864 Net indebtedness $ 838,163 Leverage Ratio 1.87 Interest-bearing debt $ 965,395 Less: Cash and cash equivalents in excess of $50 million 127,232 Net indebtedness 838,163 ($000s)
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures 32 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures 33 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures 34 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures 35 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022
Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings 36 | Valmont Industries, Inc. | 4Q and Full Year Earnings PresentationFebruary 17, 2022