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
April 20, 2023
Date of Report (date of earliest event reported)
Valmont Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
| 1-31429 | 47-0351813 | |
|---|---|---|
| (Commission File Number) | | (I.R.S. Employer Identification No.) |
| | | |
| 15000 Valmont Plaza | | 68154 |
| Omaha **** NE | | |
| (Address of Principal Executive Offices) | | (Zip Code) |
( 402 ) 963-1000
Registrant's telephone number, including area code
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| | | | | |
|---|---|---|---|---|
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| Common Stock, $1.00 par value | | VMI | | New York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02. Results of Operations and Financial Condition.
Valmont Industries, Inc. issued a press release on April 20, 2023 announcing its financial results for its fiscal quarter ended April 1, 2023. The press release, along with the presentation to be used during its earnings call on April 21, 2023, 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 April 20, 2023 |
| 99.2 | | Presentation Slides for earnings call on April 21, 2023 |
| 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: | April 20, 2023 | | | |
| | By: | /s/ AVNER M. APPLBAUM | ||
| | | Name: | Avner M. Applbaum | |
| | | Title: | Executive Vice President and Chief Financial Officer |
Exhibit **** 99.1
| | | | |
|---|---|---|---|
| | FOR IMMEDIATE RELEASE | ||
| | | | |
| Contact: | Renee Campbell | | |
| Email: | renee.campbell@valmont.com | | |
| Date: | April 20, 2023 | |
Valmont Reports Record First Quarter 2023 Results and Raises Full-Year Guidance
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 first quarter ended April 1, 2023.
First Quarter 2023 Highlights (all metrics compared to First Quarter 2022 unless otherwise noted)
| ● | Achieved record first quarter Net Sales, Operating Income and Diluted Earnings per Share (“EPS”) |
|---|---|
| o | Net Sales of $1.1 billion increased 8.3%; excluding 2022 “Other” segment, Net Sales increased 10.4%^1^ |
| --- | --- |
| o | Operating Income increased 24.9% to $118.5 million, or 11.1% of net sales (increased 23.4% to $122.1 million or 11.5% adjusted^1^) compared to $94.8 million or 9.7% of net sales ($99.0 million or 10.1% adjusted^1^); excluding 2022 “Other” segment, Operating Income growth was similar |
| --- | --- |
| o | Diluted EPS grew to $3.47 ($3.61 adjusted^1^) compared to $2.90 ($3.07 adjusted^1^) |
| --- | --- |
| ● | Generated seasonally strong operating cash flows of $21.2 million compared to $2.7 million in 2022 |
|---|---|
| ● | Secured an $85 million order to provide mechanized irrigation equipment and innovative technology for multiple agriculture development projects in Africa |
| --- | --- |
| ● | Backlog of $1.6 billion, reflecting continued strong market demand across the portfolio |
| --- | --- |
| ● | Announced a $400 million share repurchase reauthorization with no expiration and a 9% quarterly dividend increase, from $0.55 to $0.60 ($2.20 to $2.40 annualized); repurchased 356,900 shares of company stock for $111.1 million |
| --- | --- |
| ● | Effective tax rate of 30.3%, driven by the geographic mix of earnings |
| --- | --- |
^1^Please see Reg G reconciliation to GAAP measures at end of document
Key Financial Metrics
| | | | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| First Quarter 2023 | | GAAP | | Adjusted^1^ | | |||||||||||||
| (000's except per share amounts) | **** | 04/01/2023 | **** | 03/26/2022 | **** | | **** | | 04/01/2023 | **** | 03/26/2022 | **** | | | ||||
| | | Q1 2023 | | Q1 2022 | | vs. Q1 2022 | | | Q1 2023 | | Q1 2022 | | vs. Q1 2022 | | ||||
| Net Sales | | $ | 1,062,481 | | $ | 980,820 | | 8.3 | % | | $ | 1,062,481 | | $ | 962,166 | | 10.4 | % |
| Operating Income | | | 118,466 | | | 94,842 | | 24.9 | % | | | 122,125 | | | 98,985 | | 23.4 | % |
| Operating Income as a % of Net Sales | | | 11.1 | % | | 9.7 | % | | | | | 11.5 | % | | 10.3 | % | | |
| Net Earnings | | | 74,540 | | | 62,311 | | 19.6 | % | | | 77,653 | | | 65,888 | | 17.9 | % |
| Diluted Earnings Per Share | | $ | 3.47 | | $ | 2.90 | | 19.7 | % | | $ | 3.61 | | $ | 3.07 | | 17.6 | % |
| Average Shares Outstanding | | | 21,512 | | | 21,492 | | | | | | 21,512 | | | 21,492 | | |
“We delivered record results in our first quarter, demonstrating continued growth and outstanding performance as we provide innovative solutions to our customers,” said Stephen G. Kaniewski, President and Chief Executive Officer. “Driven by strong end market demand, the solid execution and operational excellence of our global teams, and our commitment to disciplined pricing strategies, we achieved significant operating income growth and margin expansion in both segments. We are executing our growth strategies while meeting growing market demand through investments in incremental capacity and technology solutions to better serve our customers. Across global infrastructure markets, we are seeing strong, multi-year demand for our products and solutions that support our customers’ critical infrastructure buildouts and energy transition initiatives. Underlying agricultural market fundamentals, particularly in South America, continue to be favorable as global commodity prices remain elevated and 2023 net farm income levels in North America are projected to remain above historical averages. Our teams around the world remain committed to providing our customers with vital infrastructure products and solutions to enhance agricultural productivity with an unwavering focus on price leadership and shareholder value creation.”
^1^Please see Reg G reconciliation to GAAP measures at end of document
First Quarter 2023 Segment Review
Infrastructure (68.9% of Net Sales)
Products and solutions to serve the infrastructure markets of utility, solar, lighting, transportation, and telecommunications, and coatings services to preserve metal products
Sales of $736.1 million grew 11.2% year-over-year, with double-digit sales growth in nearly all product lines, led by Transmission, Distribution and Substation (TD&S) and Solar (formerly Renewable Energy). Higher sales were driven by favorable pricing globally, higher volumes, notably in the Lighting and Transportation (L&T) and Solar product lines, and sales from the ConcealFab acquisition.
Operating Income improved to $94.4 million or 12.9% of net sales compared to $78.3 million or 11.9% of net sales in first quarter 2022, driven by favorable pricing and higher volumes.
Agriculture (31.1% of Net Sales)
Center pivot components and linear irrigation equipment for agricultural markets, including parts and tubular products; advanced technology solutions for precision agriculture
Sales of $332.2 million increased 8.3% year-over-year, with sales growth led by higher average selling prices of irrigation equipment globally. International sales were significantly higher, led by a record first quarter in Brazil and higher Middle East sales. North America sales were similar to last year despite first quarter 2022 benefiting from the delivery of record year-end backlog. Sales of agriculture technology products and services globally were higher.
Operating Income improved to $53.3 million, or 16.1% of net sales ($57.0 million or 17.2% adjusted^1^) compared to $37.5 million or 12.4% of net sales ($41.6 million or 13.7% adjusted^1^) in first quarter 2022. The benefit of higher average selling prices and additional volume leverage were partially offset by higher SG&A, including incremental R&D expense for technology investments.
Other
Offshore wind energy structures business
As previously announced, the divestiture of the offshore wind energy structures business was completed in December 2022. In the first quarter of 2022, the subsequently-divested business generated sales of $18.7 million and an operating loss of $0.8 million.
Balance Sheet, Liquidity, and Capital Allocation
The Company generated strong first quarter 2023 operating cash flows of $21.2 million through record earnings and effectively managing working capital while supporting sales growth. At the end of the first quarter, cash and cash equivalents were $172.9 million. This quarter, Valmont announced an additional $400.0 million share repurchase authorization with no expiration and repurchased $111.1 million of company stock, with $370.3 million remaining on the share repurchase program. During the quarter, Moody's reaffirmed the Company's Baa3/Stable credit rating.
^1^Please see Reg G reconciliation to GAAP measures at end of document
Updating 2023 Full Year Financial Outlook and Key Assumptions
The Company is raising its full-year diluted earnings per share outlook from the previous indications that were communicated last quarter and is providing updated key assumptions for the year.
| | | |
|---|---|---|
| 2023 Full Year Financial Outlook | Previous Outlook | Revised Outlook |
| Net Sales Growth (vs. PY) | 4% to 7% | No Change |
| GAAP Diluted Earnings per Share | $14.70 to $15.25 | $14.80 to $15.35 |
| Adjusted Diluted Earnings per Share^1^ | $15.35 to $15.90 | $15.45 to $16.00 |
| ● | 2022 sales include the offshore wind energy structures business which was divested at the end of fiscal 2022 |
|---|---|
| ● | Effective tax rate of 28% to 29%, primarily due to expected geographic mix of earnings |
| --- | --- |
| ● | Minimal expected foreign currency translation impact to net sales |
| --- | --- |
| ● | Capital expenditures expected to be in the range of $105 to $125 million to support strategic growth and digital transformation initiatives |
| --- | --- |
| ● | Continued elevated inflation, raw material costs aligned with current price projections, and ongoing R&D investments |
| --- | --- |
Kaniewski continued, “We are excited about the opportunity to support our customers and drive multi-year profitable growth by capitalizing on the strong market drivers across our businesses. These factors, along with our proven track record of execution and a backlog of $1.6 billion, give us confidence in our 2023 outlook. The long-term need for critical infrastructure investment globally is supporting multi-year market growth trends. Favorable global agriculture market trends, strong international markets and increasing adoption of innovative technology solutions are supporting growth for our Agriculture business. Looking ahead to the second quarter, we expect difficult sales comparisons in the Agriculture segment due to international project timing and last year’s ongoing delivery of considerable levels of backlog. Operating margin levels are expected to continue across the portfolio for second quarter and full year due to better price/cost alignment. We will continue to execute pricing strategies to manage broad-based inflation and leverage the strength of our global supply chain to deliver innovative products and solutions to our customers. Our balance sheet remains strong, giving us the flexibility to execute our long-term strategic plan. Our strategy remains focused on long-term profitable growth with an organizational emphasis on return on invested capital and operational excellence as we invest to meet the future needs of our customers and deliver value to our stakeholders.”
A live audio discussion with Stephen G. Kaniewski, President and Chief Executive Officer, and Avner M. Applbaum, Executive Vice President and Chief Financial Officer, will be accessible by telephone on Friday, April 21, 2023 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 1Q 2023 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 13734761. The replay will be available through 10:59 p.m. CDT on Friday, April 28, 2023.
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.
^1^Please see Reg G reconciliation to GAAP measures at end of document
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)
| | | | | | | |
|---|---|---|---|---|---|---|
| | | First Quarter | ||||
| | | 13 Weeks Ended | ||||
| | | 04/01/2023 | **** | 03/26/2022 | ||
| Net sales | | $ | 1,062,481 | | $ | 980,820 |
| Cost of sales | | | 753,896 | | | 731,634 |
| Gross profit | | | 308,585 | | | 249,186 |
| Selling, general, and administrative expenses | | | 190,119 | | | 154,344 |
| Operating income | | | 118,466 | | | 94,842 |
| Other income (expense) | | | | | ||
| Interest expense | | | (13,105) | | | (11,263) |
| Interest income | | | 830 | | | 227 |
| Gain (loss) on investments - unrealized | | | 1,194 | | | (1,063) |
| Other | | | (2,376) | | | 3,642 |
| Other income (expense), net | | | (13,457) | | | (8,457) |
| Earnings before income taxes | | | 105,009 | | | 86,385 |
| Income tax expense | | | 31,843 | | | 23,121 |
| Equity in loss of nonconsolidated subsidiaries | | | (821) | | | (358) |
| Net earnings | | | 72,345 | | | 62,906 |
| Less: Loss (earnings) attributable to non-controlling interests | | | 2,195 | | | (595) |
| Net earnings attributable to Valmont Industries, Inc. | | $ | 74,540 | | $ | 62,311 |
| | | | | | | |
| Average shares outstanding (000's) - Basic | | | 21,269 | | | 21,279 |
| Earnings per share - Basic | | $ | 3.50 | | $ | 2.93 |
| | | | | | | |
| Average shares outstanding (000's) - Diluted | | | 21,512 | | | 21,492 |
| Earnings per share - Diluted | | $ | 3.47 | | $ | 2.90 |
| | | | | | | |
| Cash dividends per share | | $ | 0.60 | | $ | 0.55 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
| | | | | | | |
|---|---|---|---|---|---|---|
| | | | First Quarter | |||
| | | 13 Weeks Ended | ||||
| | | 04/01/2023 | **** | 03/26/2022 | ||
| Net sales | | | | | | |
| Infrastructure | | $ | 736,106 | | $ | 662,072 |
| Agriculture | | | 332,163 | | | 306,580 |
| Other | | | — | | | 18,654 |
| Total | | | 1,068,269 | | | 987,306 |
| Less: Intersegment sales | | | (5,788) | | | (6,486) |
| Total | | $ | 1,062,481 | | $ | 980,820 |
| | | | | | | |
| Operating Income (Loss) | | | | | ||
| Infrastructure | | $ | 94,352 | | $ | 78,316 |
| Agriculture | | | 53,323 | | | 37,475 |
| Other | | | — | | | (809) |
| Corporate | | | (29,209) | | | (20,140) |
| Total | | $ | 118,466 | | $ | 94,842 |
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 the infrastructure markets of utility, solar, lighting, transportation, and telecommunications, and coatings services to preserve metal products.*
Agriculture*: This segment consists of the manufacture of center pivot components and linear irrigation equipment for agricultural markets, including parts and tubular products, and advanced technology solutions for precision agriculture.*
In addition to these two reportable segments, the Company had a business and related activities in 2022 that were not more than 10% of consolidated sales, operating income, or assets. This included the offshore wind energy structures business which was reported in the “Other” segment until its divestiture in December 2022.
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OPERATING RESULTS
(Dollars in thousands)
(Unaudited)
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirteen weeks ended April 1, 2023 | |||||||||||||
| | | | | | | | | | | Intersegment | | | | ||
| | **** | Infrastructure | **** | Agriculture | **** | Other | | Sales | **** | Consolidated | |||||
| Geographical market: | | | | | | | | | | | | | | | |
| North America | | $ | 584,083 | | $ | 182,869 | | $ | — | | $ | (5,374) | | $ | 761,578 |
| International | | | 152,023 | | | 149,294 | | | — | | | (414) | | | 300,903 |
| Total | | $ | 736,106 | | $ | 332,163 | | $ | — | | $ | (5,788) | | $ | 1,062,481 |
| | | | | | | | | | | | | | | | |
| Product line: | | | | | | | | | | | |||||
| Transmission, Distribution, and Substation | | $ | 314,820 | | $ | — | | $ | — | | $ | — | | $ | 314,820 |
| Lighting and Transportation | | | 229,136 | | | — | | | — | | | — | | | 229,136 |
| Coatings | | | 90,114 | | | — | | | — | | | (3,552) | | | 86,562 |
| Telecommunications | | | 68,137 | | | — | | | — | | | — | | | 68,137 |
| Solar | | | 33,899 | | | — | | | — | | | (414) | | | 33,485 |
| Irrigation Equipment and Parts, | | | | | | | | | | | | | | | |
| excluding Technology | | | — | | | 299,181 | | | — | | | (1,822) | | | 297,359 |
| Technology Products and Services | | | — | | | 32,982 | | | — | | | — | | | 32,982 |
| Total | | $ | 736,106 | | $ | 332,163 | | $ | — | | $ | (5,788) | | $ | 1,062,481 |
| | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirteen weeks ended March 26, 2022 | |||||||||||||
| | | | | | | | | | | Intersegment | | | | ||
| | **** | Infrastructure | **** | Agriculture | **** | Other | | Sales | **** | Consolidated | |||||
| Geographical market: | | | | | | | | | | | | | | | |
| North America | | $ | 505,980 | | $ | 182,255 | | $ | — | | $ | (6,486) | | $ | 681,749 |
| International | | | 156,092 | | | 124,325 | | | 18,654 | | | — | | | 299,071 |
| Total | | $ | 662,072 | | $ | 306,580 | | $ | 18,654 | | $ | (6,486) | | $ | 980,820 |
| | | | | | | | | | | | | | | | |
| Product line: | | | | | | | | | | | | | | | |
| Transmission, Distribution, and Substation | | $ | 281,600 | | $ | — | | $ | — | | $ | — | | $ | 281,600 |
| Lighting and Transportation | | | 212,767 | | | — | | | — | | | — | | | 212,767 |
| Coatings | | | 81,976 | | | — | | | — | | | (3,101) | | | 78,875 |
| Telecommunications | | | 61,396 | | | — | | | — | | | — | | | 61,396 |
| Solar | | | 24,333 | | | — | | | 18,654 | | | — | | | 42,987 |
| Irrigation Equipment and Parts, | | | | | | | | | | | | | | | |
| excluding Technology | | | — | | | 278,034 | | | — | | | (3,385) | | | 274,649 |
| Technology Products and Services | | | — | | | 28,546 | | | — | | | — | | | 28,546 |
| Total | | $ | 662,072 | | $ | 306,580 | | $ | 18,654 | | $ | (6,486) | | $ | 980,820 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(unaudited)
| | | | | | | |
|---|---|---|---|---|---|---|
| | | 04/01/2023 | **** | 12/31/2022 | ||
| ASSETS | | | | | | |
| Current assets: | | | | | | |
| Cash and cash equivalents | | $ | 172,948 | | $ | 185,406 |
| Accounts receivable, net | | | 650,041 | | | 604,181 |
| Inventories | | | 725,360 | | | 728,762 |
| Contract assets | | | 159,785 | | | 174,539 |
| Prepaid expenses and other assets | | | 107,365 | | | 87,697 |
| Total current assets | | | 1,815,499 | | | 1,780,585 |
| Property, plant, and equipment, net | | | 598,848 | | | 595,578 |
| Goodwill and other assets | | | 1,190,145 | | | 1,180,833 |
| | | $ | 3,604,492 | | $ | 3,556,996 |
| | | | | | | |
| LIABILITIES AND SHAREHOLDERS' EQUITY | | | | | ||
| Current liabilities: | | | | | ||
| Current installments of long-term debt | | $ | 1,165 | | $ | 1,194 |
| Notes payable to banks | | | 11,436 | | | 5,846 |
| Accounts payable | | | 368,576 | | | 360,312 |
| Accrued expenses | | | 211,112 | | | 248,320 |
| Contract liabilities | | | 156,333 | | | 172,915 |
| Income taxes payable | | | 20,093 | | | 3,664 |
| Dividends payable | | | 12,634 | | | 11,742 |
| Total current liabilities | | | 781,349 | | | 803,993 |
| Long-term debt, excluding current installments | | | 985,636 | | | 870,935 |
| Operating lease liabilities | | | 151,219 | | | 155,469 |
| Other long-term liabilities | | | 87,888 | | | 84,887 |
| Shareholders' equity | | | 1,598,400 | | | 1,641,712 |
| | | $ | 3,604,492 | | $ | 3,556,996 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(unaudited)
| | | | | | | |
|---|---|---|---|---|---|---|
| | | 13 Weeks Ended | | 13 Weeks Ended | ||
| | | 04/01/2023 | **** | 03/26/2022 | ||
| Cash flows from operating activities | | | | | | |
| Net earnings | | $ | 72,345 | | $ | 62,906 |
| Depreciation and amortization | | | 24,558 | | | 23,884 |
| Contribution to defined benefit pension plan | | | (15,259) | | | — |
| Change in working capital | | | (83,206) | | | (91,929) |
| Other | | | 22,761 | | | 7,842 |
| Net cash flows provided by operating activities | | | 21,199 | | | 2,703 |
| | | | | | | |
| Cash flows from investing activities | | | | | ||
| Purchase of property, plant, and equipment | | | (22,361) | | | (27,095) |
| Other | | | 572 | | | (2,005) |
| Net cash flows used in investing activities | | | (21,789) | | | (29,100) |
| | | | | | | |
| Cash flows from financing activities | | | | | ||
| Proceeds from long-term borrowings | | | 125,000 | | | 97,000 |
| Principal payments on long-term borrowings | | | (10,796) | | | (82,529) |
| Net proceeds (payments) on short-term borrowings | | | 5,302 | | | (5,562) |
| Purchase of treasury shares | | | (111,115) | | | — |
| Dividends to noncontrolling interests | | | (654) | | | — |
| Dividends paid | | | (11,742) | | | (10,616) |
| Other | | | (9,004) | | | (1,814) |
| Net cash flows used in financing activities | | | (13,009) | | | (3,521) |
| Effect of exchange rates on cash and cash equivalents | | | 1,141 | | | 2,386 |
| Net change in cash and cash equivalents | | | (12,458) | | | (27,532) |
| Cash and cash equivalents - beginning of year | | | 185,406 | | | 177,232 |
| Cash and cash equivalents - end of period | | $ | 172,948 | | $ | 149,700 |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
SUMMARY OF EFFECT OF 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 2023 and 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 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 | ||
| | | weeks ended | | earnings per | ||
| | | April 1, 2023 | | share | ||
| Net earnings attributable to Valmont Industries, Inc. - as reported | | $ | 74,540 | | $ | 3.47 |
| Prospera intangible asset amortization | | | 1,645 | | | 0.08 |
| Stock-based compensation - Prospera | | | 2,014 | | | 0.09 |
| Total Adjustments, pre-tax^1^ | | | 3,659 | | | 0.17 |
| Tax effect of adjustments^2^ | | | (546) | | | (0.03) |
| Net earnings attributable to Valmont Industries, Inc. - Adjusted^1^ | | $ | 77,653 | | $ | 3.61 |
| Average shares outstanding (000’s) - Diluted | | | | | | 21,512 |
| | | | | | | |
|---|---|---|---|---|---|---|
| | | Thirteen | | Diluted | ||
| | | weeks ended | | earnings per | ||
| | | March 26, 2022 | | share | ||
| Net earnings attributable to Valmont Industries, Inc. - as reported | | $ | 62,311 | | $ | 2.90 |
| Prospera intangible asset amortization | | | 1,645 | | | 0.08 |
| Stock-based compensation - Prospera | | | 2,498 | | | 0.12 |
| Total Adjustments, pre-tax^1^ | | | 4,143 | | | 0.19 |
| Tax effect of adjustments^2^ | | | (566) | | | (0.03) |
| Net earnings attributable to Valmont Industries, Inc. - Adjusted^1^ | | $ | 65,888 | | $ | 3.07 |
| Average shares outstanding (000’s) - Diluted | | | | | | 21,492 |
^1^Earnings per share includes rounding
^2^The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction.
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 2023 and 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 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 April 1, 2023 | | |||||||||||||
| Operating Income Reconciliation | | Infrastructure | Agriculture | Other | | Corporate | Valmont | |||||||||
| Operating income - as reported | | $ | 94,352 | | $ | 53,323 | | $ | — | | $ | (29,209) | | $ | 118,466 | |
| Prospera intangible asset amortization | | | — | | | 1,645 | | | — | | | — | | | 1,645 | |
| Stock-based compensation - Prospera | | | — | | | 2,014 | | | — | | | — | | | 2,014 | |
| Adjusted Operating Income | | $ | 94,352 | | $ | 56,982 | | $ | — | | $ | (29,209) | | $ | 122,125 | |
| Net Sales - as reported | | | 732,140 | | | 330,341 | | | — | | | — | | | 1,062,481 | |
| | | | | | | | | | | | | | | | | |
| Operating Income as a % of Net Sales | | | 12.9 | % | | 16.1 | % | | NM | | | NM | | | 11.1 | % |
| Adj. Operating Income as a % of Net Sales | | | 12.9 | % | | 17.2 | % | | NM | | | NM | | | 11.5 | % |
| | | | | | | | | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | Thirteen weeks ended March 26, 2022 | | |||||||||||||
| Operating Income Reconciliation | | Infrastructure | Agriculture | Other | | Corporate | Valmont | |||||||||
| Operating income - as reported | | $ | 78,316 | | $ | 37,475 | | $ | (809) | | $ | (20,140) | | $ | 94,842 | |
| Prospera intangible asset amortization | | | — | | | 1,645 | | | — | | | — | | | 1,645 | |
| Stock-based compensation - Prospera | | | — | | | 2,498 | | | — | | | — | | | 2,498 | |
| Adjusted Operating Income | | $ | 78,316 | | $ | 41,618 | | $ | (809) | | $ | (20,140) | | $ | 98,985 | |
| Net Sales - as reported | | | 658,971 | | | 303,195 | | | 18,654 | | | — | | | 980,820 | |
| | | | | | | | | | | | | | | | | |
| Operating Income as a % of Net Sales | | | 11.9 | % | | 12.4 | % | | (4.3) | % | | NM | | | 9.7 | % |
| Adj. Operating Income as a % of Net Sales | | | 11.9 | % | | 13.7 | % | | (4.3) | % | | NM | | | 10.1 | % |
VALMONT INDUSTRIES, INC. AND SUBSIDIARIES
REGULATION G RECONCILIATION OF EXCLUDING OTHER SEGMENT NET SALES
(Dollars in thousands, except per share amounts)
(unaudited)
Excluding Other segment net sales from the first quarter of fiscal 2022, which we refer to in this reconciliation as “Adjusted Net Sales” is a non-GAAP measure. The Other segment net sales were generated by the wind energy structures business which was divested in December 2022. Adjusted Net Sales should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in accordance with GAAP, or as a measure of our operating performance or liquidity. The table below shows how Adjusted Net Sales is calculated from our statements of earnings. Adjusted Net Sales is calculated as Net Sales less Other segment net sales. Adjusted Net Sales allows investors to analyze our operating performance in light of the amount of net sales less net sales of a divested business.
| | | | | | | | | | |
|---|---|---|---|---|---|---|---|---|---|
| | | 13 Weeks Ended | | 13 Weeks Ended | | | | ||
| | | 04/01/2023 | **** | 03/26/2022 | | % Change | |||
| Net sales | | $ | 1,062,481 | | $ | 980,820 | | | 8.3% |
| Other segment net sales | | | — | | | 18,654 | | | NM |
| Adjusted net sales | | $ | 1,062,481 | | $ | 962,166 | | | 10.4% |
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 - 2023 Guidance | | Low End | **** | High End | **** | Adjustments | |||
| Estimated net earnings - GAAP | | $ | 318,250 | | $ | 330,050 | | | |
| Prospera intangible asset (proprietary technology) amortization, pre-tax | | | | | | | | | 6,600 |
| Stock-based compensation - Prospera, pre-tax | | | | | | | | | 9,800 |
| Total pre-tax adjustments | | | | | | | | | 16,400 |
| Estimated tax benefit from above expenses^1^ | | | | | | | | (2,450) | |
| | | | | | | | | | |
| Total Adjustments, after-tax | | | | | | | $ | 13,950 | |
| Estimated net earnings - Adjusted | | $ | 332,200 | | $ | 344,000 | | | |
| Diluted Earnings Per Share Range - GAAP^2^ | | $ | 14.80 | | $ | 15.35 | | | |
| Diluted Earnings Per Share Range - Adjusted^2^ | | $ | 15.45 | | $ | 16.00 | | |
^1^ The tax effect of adjustments is calculated based on the estimated income tax rate in each applicable jurisdiction.
^2^ Assumes weighted average shares outstanding of 21.5M, and includes rounding
Exhibit 99.2
| © 2023 Valmont® Industries, Inc.<br>Valmont Industries, Inc.<br>First Quarter 2023<br>Earnings Presentation<br>April 21, 2023 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Disclosure Regarding Forward-Looking Statements<br>These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the<br>Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties, and other<br>factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such<br>statements, including general economic and business conditions, conditions affecting the industries served by the Company and its<br>subsidiaries including the continuing and developing effects of the pandemic including the effects of the outbreak on the general<br>economy and the specific economic responses to the Company’s products and services, the overall market acceptance of such<br>products and services, the integration of acquisitions and other factors disclosed in the Company’s periodic reports filed with the<br>Securities and Exchange Commission, as well as future economic and market circumstances, industry conditions, company<br>performance and financial results, operating efficiencies, availability and price of raw materials, availability and market acceptance<br>of new products, product pricing, domestic and international competitive environments, geopolitical risks and actions, and policy<br>changes of domestic and foreign governments. Consequently, such forward-looking statements should be regarded as the<br>Company’s current plans, estimates, and beliefs. The Company does not undertake and specifically declines any obligation to<br>publicly release the results of any revisions to these forward-looking statements that may be made to reflect any future events or<br>circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.<br>2 April 21, 2023 | Valmont Industries, Inc. | ||||||||||||||
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| STEVE KANIEWSKI<br>PRESIDENT & CHIEF EXECUTIVE OFFICER<br>3 April 21, 2023 | Valmont Industries, Inc. | ||||||||||||||
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| 1Q 2023 Financials and Key Messages<br> | Valmont Industries, Inc.<br>1 Please see Reg G reconciliation to GAAP measures at end of document.<br>01<br>The global Valmont team has delivered a great start to 2023 with record first quarter<br>sales, operating income, and EPS; strong operating cash flow; and achieving key<br>strategic milestones<br>02 We have built a leading presence in global Infrastructure and Agriculture markets with<br>strong end market demand<br>03 Our disciplined and strategic pricing ensures we are capturing the value we add, growing<br>sales and expanding margins even in an inflationary environment<br>04 We are committed to a balanced capital deployment framework that includes returning<br>cash to shareholders through a growing dividend and continued share repurchases<br>4 April 21, 2023<br>11.1%<br>Operating Margin<br>$1.06B<br>Net Sales<br>+8.3%<br>Y/Y Net Sales<br>11.5%<br>Adj. Operating Margin1<br>$3.47<br>GAAP Diluted EPS<br>$3.61<br>Adj. Diluted EPS1<br>$21M<br>Operating Cash Flow Cash Returned to<br>Shareholders<br>$123M | ||||||||||||||
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| INFRASTRUCTURE AGRICULTURE<br>Poised to Perform Well in Current Market Conditions<br>5 April 21, 2023 | Valmont Industries, Inc.<br>Investing in Capacity and Technology to Capture Attractive Industry Trends and Drive Above Market Growth<br>• Benefiting from several long-term, secular growth drivers<br>such as the global energy transition<br>• Utilities are increasing capex spending to support grid<br>hardening initiatives and an evolving generation portfolio<br>• Utility spending initiatives continue to show resilience to a<br>higher cost of capital environment, inflation, and general<br>economic concerns<br>• Renewable energy transition driving Solar order rates<br>• L&T quoting activity related to IIJA continues to increase<br>• Telecom markets growing with 5G rollout and densification<br>• International market fundamentals remain very strong<br>‒ Brazil seeing growth in exports and irrigated land;<br>we are expanding local capacity to serve local demand<br>‒ Robust project pipeline is providing a multi-year line of<br>sight; food security concerns and growing populations<br>driving demand<br>• Underlying market fundamentals in North America remain<br>positive; near-term sentiment improving after slow start to<br>2023 as net farm income expected to remain high | ||||||||||||||
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| AgTech Tour 2023<br>Taking Technology Advancements on the Road<br>6 April 21, 2023 | Valmont Industries, Inc.<br>Technology Investments Paying Off as Adoption Rates Increase<br>• Demonstrating leadership in ag productivity<br>• Kickoff event held April 5 at Valmont Global HQ<br>• 6-month tour featuring hands-on tech interaction at Valley<br>Dealers across the country<br>− Remote control solutions<br>− Machine health diagnostics<br>− Plant Insights to monitor crop health<br>• Technology solutions provide unparalleled agronomy data<br>and insights<br>• Enables growers to maximize land productivity and better<br>manage the effects of elevated input costs and labor<br>shortages<br>Nebraska Governor Jim Pillen addresses AgTech Tour Launch, April 5, 2023<br>Scan to learn more<br>about our 2023 AgTech Tour | ||||||||||||||
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| Conserving Resources, Improving Life®<br>7 April 21, 2023 | Valmont Industries, Inc.<br>Demonstrating Dedication to Sustainable Practices and Solutions<br>CHAMPION GREAN TEAM:<br>ACACIA RIDGE, AUSTRALIA<br>• 2022 Valmont Sustainability Award winner<br>• Implemented several sustainability<br>improvements<br>− Installation of a 100-kWh solar array that will<br>reduce carbon emissions by 125MT annually<br>− Implementation of an aluminum can recycling<br>initiative suggested by employees that captured<br>100% of this material at the site<br>− Working with local metals scrap firm to collect and<br>recycle additional steel waste and off-cuts, adding<br>an additional 192MT of steel recycling annually<br>− Launching a wood recycling program that<br>diverted 11.8MT of related waste from landfill<br>• Released our 2023 Sustainability Report with plan for dedicated ESG<br>conference call later this year<br>• Spotlight on the successes of our Champion Green Teams<br>• Employee engagement pulse survey results<br>• Recommitted to our 2025 environmental goals1<br>:<br>10%<br>Reduction in<br>Scope I/II<br>Carbon Intensity<br>19%<br>Reduction in Scope I<br>Mobile Source<br>Combustion Fuel<br>Carbon Emissions<br>12%<br>Additional Reduction in<br>Normalized Global<br>Electrical Usage<br>100%<br>of global manufacturing<br>facilities to adopt low-flow<br>water fixtures for<br>nonproduction areas<br>1 Based on 2018 Baseline Data | ||||||||||||||
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| 8 April 21, 2023 | Valmont Industries, Inc.<br>AVNER APPLBAUM<br>EVP & CHIEF FINANCIAL OFFICER | ||||||||||||||
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| 9 April 21, 2023 | Valmont Industries, Inc.<br>1Q 2023 Financial Summary<br>• Record sales as strong broad-based demand drove higher volumes despite macroeconomic volatility; disciplined pricing strategy to<br>capture delivered value and offset inflation; excluding “Other” segment, sales grew 10.4%1<br>• Global backlog of $1.6 billion, reflecting strong market demand for our differentiated, sustainable solutions<br>• Operating margin improved to 11.1% (11.5% adjusted1<br>), approaching long-term goal of 12%, reflecting a disciplined pricing strategy<br>on higher volumes, and improved fixed-cost leverage<br>• EPS growth driven by higher operating income, partially offset by higher tax expense due to changes in geographic earnings mix<br>1 Please see Reg G reconciliation to GAAP measures at end of document.<br>SALES ($M) OPERATING INCOME ($M) DILUTED EPS<br>GAAP Adjusted1 GAAP Adjusted1<br>+ 8.3% + 24.9% + 23.4% + 19.7% + 17.6%<br>$2.90<br>$3.47<br>$3.07<br>$3.61<br>2022 2023 2022 2023<br>$94.8<br>$118.5<br>$99.0<br>$122.1<br>2022 2023 2022 2023<br>9.7% 11.1% 10.3% 11.5%<br>$980.8 $1,062.5<br>$962.2<br>$1,062.5<br>2022 2023 2022 2023<br>GAAP Adjusted1<br>+ 10.4% | ||||||||||||||
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| 10 April 21, 2023 | Valmont Industries, Inc.<br>1Q 2023 Results | Infrastructure<br>SALES ($M)<br>• Higher pricing and strong underlying demand across global markets for all product lines; record TD&S sales, double-digit growth in<br>nearly all product lines, and sales contribution from the ConcealFab acquisition<br>• Continued investments in grid resilience, clean energy solutions, upgrading infrastructure, and 5G rollouts with future benefits<br>expected from Infrastructure Investment and Jobs Act (“IIJA”) and Inflation Reduction Act (“IRA”)<br>• Operating margin improved 100 bps to 12.9%, due to sustained pricing and volume growth<br>OPERATING INCOME ($M)<br>+ 11.2%<br>SALES ($M) 2022 2023 %<br>Transmission,<br>Distribution, and<br>Substation (TD&S)<br>$281.6 $314.8 +12%<br>Lighting and<br>Transportation (L&T) 212.8 229.1 +8%<br>Coatings 82.0 90.1 +10%<br>Telecommunications 61.4 68.1 +11%<br>Solar 24.3 33.9 +39%<br>+ 20.5%<br>$78.3<br>$94.4<br>2022 2023<br>$662.1<br>$736.1<br>2022 2023<br>11.9% 12.9% | |||||||||||||
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| 11 April 21, 2023 | Valmont Industries, Inc.<br>1Q 2023 Results | Agriculture<br>• Sales growth on sustained pricing, volume growth, and higher technology sales; International markets remain strong with record<br>sales in Brazil and a robust project pipeline elsewhere; North America volumes were lower as first quarter 2022 benefited from the<br>delivery of record year-end backlog; technology sales higher globally<br>• Operating margins increased due to higher average selling prices and additional volume leverage, partially offset by higher SG&A,<br>including incremental R&D expense for technology investments<br>SALES ($M) OPERATING INCOME ($M)<br>GAAP Adjusted1<br>1 Please see Reg G reconciliation to GAAP measures at end of document. + 8.3% + 42.3% + 36.9%<br>SALES ($M) 2022 2023 %<br>North American<br>Irrigation $182.3 $182.9 +0%<br>International<br>Irrigation 124.3 149.3 +20%<br>Equipment and Parts $278.0 $299.2 +8%<br>Agricultural<br>Technology 28.5 33.0 +16%<br>$37.5<br>$53.3<br>$41.6<br>$57.0<br>2022 2023 2022 2023<br>$306.6 $332.2<br>2022 2023<br>12.4% 16.1% 13.7% 17.2% | |||||||||||||
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| 12 April 21, 2023 | Valmont Industries, Inc.<br>YTD Cash Flow Highlights<br>Expect FCF Improvement as We Diligently Manage Working Capital ($M) YTD 04/01/2023<br>Net Cash Flows from Operating Activities $ 2 1<br>Net Cash Flows from Investing Activities (22)<br>Net Cash Flows from Financing Activities (13)<br>Net Cash Flows from Operating Activities $ 2 1<br>Purchase of Property, Plant, & Equipment (22)<br>Free Cash Flows $ (1) | ||||||||||||||
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| Balanced Approach to Capital Allocation<br>13 April 21, 2023 | Valmont Industries, Inc.<br>GROWING OUR BUSINESS RETURNING CASH TO SHAREHOLDERS<br>• Investments to support<br>strategic growth initiatives<br>and Industry 4.0 advanced<br>manufacturing<br>• Targeting high growth<br>opportunities in end markets with<br>favorable and global long-term<br>demand trends<br>• Returns exceeding cost of<br>capital within 3 years<br>• Additional $400M share<br>repurchase authorization<br>announced February 2023<br>• Opportunistic approach,<br>supported by free cash flow<br>• ~$370M remains on current<br>authorization<br>• 9% dividend increase announced<br>February 2023<br>• Payout ratio target: 22% of earnings<br>• Current payout: ~17%<br>2023 First Quarter Capital Deployment: $145M<br>$22M<br>Capital Expenditures<br>N/A<br>Acquisitions<br>$111M<br>Share Repurchases<br>$12M<br>Dividends | ||||||||||||||
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| 14 April 21, 2023 | Valmont Industries, Inc.<br>Strong Balance Sheet and Liquidity<br>As of April 1, 2023<br>► Long-term debt mostly fixed-rate, with long-dated maturities to 2044 and 2054; Moody’s reaffirmed Baa3 Stable credit rating<br>► Total Debt to Adjusted EBITDA remains within our desired range of 1.5 to 2.5 times<br>► Strong and flexible balance sheet to support balanced capital allocation strategy<br>1See slide 34 for calculation of Adjusted EBITDA and Leverage Ratio. 2 $800M Total Revolver less borrowings and Standby LC’s of $256M.<br>Cash $173 M<br>Available Credit under<br>Revolving Credit Facility2 $544 M<br>Total Long-Term Debt $986 M Cash $173 M<br>Shareholders' Equity $1,598 M Total Available Liquidity $717 M<br>Total Debt to Adj. EBITDA1 1.7 x | ||||||||||||||
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| No Change<br>$15.45 – $16.00<br>Adj. Diluted EPS2<br>$14.80 – $15.35<br>GAAP Diluted EPS<br>CURRENT<br>2023 OUTLOOK1<br>4% – 7%<br>Increase in Net Sales Y/Y<br>$15.35 – $15.90<br>Adj. Diluted EPS1<br>$14.70 – $15.25<br>GAAP Diluted EPS<br>PREVIOUS<br>2023 OUTLOOK1<br>4% – 7%<br>Increase in Net Sales Y/Y<br>$15.35 – $15.90<br>Adj. Diluted EPS2<br>$14.70 – $15.25<br>GAAP Diluted EPS<br>Updated Full Year 2023 Outlook and Key Assumptions<br>15 April 21, 2023 | Valmont Industries, Inc.<br>1 Exclusive of potential future restructuring activities. 2Please see Reg G reconciliation to GAAP measures at end of document.<br>KEY ASSUMPTIONS<br>• 2022 sales include the offshore wind energy structures<br>business which was divested at the end of fiscal 2022<br>• Effective tax rate of 28% to 29%, primarily due to expected<br>geographic mix of earnings<br>• Minimal expected foreign currency translation impact to net<br>sales<br>• Capital expenditures expected to be in the range of $105 to<br>$125 million to support strategic growth and digital<br>transformation initiatives<br>• Continued elevated inflation, raw material costs aligned with<br>current price projections, and ongoing R&D investments<br>Backlog of $1.6B at the End of 1Q 2023 | ||||||||||||||
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| Fundamental Market Drivers Remain Resilient<br>16 April 21, 2023 | Valmont Industries, Inc.<br>INFRASTRUCTURE<br>• Long-term need for critical infrastructure investment globally,<br>supported by current and future stimulus<br>• Ongoing demand and necessity for renewables, grid hardening and<br>resiliency and load growth in North America utility markets<br>• Ongoing investment in sustainable transportation infrastructure,<br>including lighting systems and long bridge systems<br>• Increased number of economies actively fighting costs of corrosion<br>will drive need to extend life of steel products globally over long<br>term<br>• Rapid acceleration of 5G network deployment and carriers’<br>investments support macro buildouts in suburban and<br>rural communities<br>• Increasing demand for integrated smart technology solutions<br>AGRICULTURE<br>• Favorable market conditions, including elevated commodity prices<br>and positive farmer sentiment are leading to increasing demand for<br>irrigation equipment and technology solutions globally<br>• Food security with a growing population and continued<br>geo-political concerns are driving international governments’<br>investment in agriculture<br>• Growth in technology adoption led by growers' increasing demand<br>for connected crop management and advanced analytics to reduce<br>input costs, increase land productivity and minimize farm labor<br>costs<br>• Helping customers meet their own ESG initiatives through<br>ag solar solutions | ||||||||||||||
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| Summary<br>17 April 21, 2023 | Valmont Industries, Inc.<br>Performing well, with robust end market demand across global Infrastructure and<br>Agriculture markets with long-term favorable drivers<br>Building a performance culture by exhibiting our core values and adhering to a<br>differentiating business model to improve productivity and drive financial results<br>Disciplined capital allocation allocating capital to high-growth strategic investments<br>while returning capital to shareholders through dividends and share repurchases<br>Investing in our employees and technology to drive innovative new products and<br>services, and build upon the strength of our operation excellence framework<br>1<br>2<br>3<br>4<br>Poised for Sustainable Growth and Performance to Drive Stakeholder Value Well into the Future | ||||||||||||||
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| 18 April 21, 2023 | Valmont Industries, Inc.<br>Q&A | ||||||||||||||
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| 19 April 21, 2023 | Valmont Industries, Inc.<br>APPENDIX | ||||||||||||||
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| 20 April 21, 2023 | Valmont Industries, Inc.<br>1<br>Includes rounding<br>1Q 2023 Financial Summary<br>$M, except for per share amounts<br>2Please see Reg G reconciliation to GAAP measures at end of document..<br>Net Sales 2023 2022 Change<br>Infrastructure $ 736.1 $ 662.1 11.2%<br>Agriculture 332.2 306.6 8.3%<br>Other - 18.7 NM<br>Intersegment Sales1<br> (5.8) (6.6) NM<br>Net Sales $ 1,062.5 $ 980.8 8.3%<br>Adjusted Net Sales2 $ 1,062.5 $ 962.2 10.4%<br>Operating Income $ 118.5 $ 94.8 24.9%<br>Adjusted Operating Income2 $ 122.1 $ 99.0 23.4%<br>Net Earnings $ 74.5 $ 62.3 19.6%<br>Adjusted Net Earnings2 $ 77.7 $ 65.9 17.9%<br>Diluted Earnings Per Share (EPS) $ 3.47 $ 2.90 19.7%<br>Adjusted Diluted EPS2 $ 3.61 $ 3.07 17.6% | ||||||||||||||
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| U.S. Electric Utilities Capital Expenditures<br>21 April 21, 2023 | Valmont Industries, Inc.<br>Source: EEI Finance Department, member company reports, and S&P Global Market Intelligence (updated Sept 2022). | ||||||||||||||
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| 22 April 21, 2023 | Valmont Industries, Inc.<br>Infrastructure Investment and Jobs Act (IIJA)<br>Infrastructure Investment and Jobs Act Spending Breakdown (In Order - Most to Least)<br>Previously-Passed Transportation Funding | $650B<br>Roads, Bridges and Related Programs | $111B<br>Energy, Power and Electric Grid Reliability | $107.5B<br>Freight and Passenger Rail | $66B<br>Broadband | $65B<br>Water and Wastewater Infrastructure | $55B<br>Public Transportation | $39.2B<br>Airports | $25B<br>Natural Disaster Prevention and Mitigation | $23.3B<br>Cleaning-Up Abandoned Sites | $21B<br>Army Corps of Engineers | $16.7B<br>Highway and Pedestrian Safety | $11B<br>Ports and Coast Guard | $7.8B<br>Cybersecurity and other Infrastructure Programs | $10.11B<br>Source: Grassley.senate.gov |
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| 23 April 21, 2023 | Valmont Industries, Inc.<br>5G Adoption and Capex Spend Forecasts<br>Source: GSMA Intelligence- The Mobile Economy 2023 | ||||||||||||||
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| 24 April 21, 2023 | Valmont Industries, Inc.<br>U.S. Net Cash Farm Income by Year<br>Source: USDA (February 7, 2023) | ||||||||||||||
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| U.S. Drought Condition<br>25 April 21, 2023 | Valmont Industries, Inc.<br>Source: Drought Monitor (April 13, 2023) | ||||||||||||||
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| 26 April 21, 2023 | Valmont Industries, Inc.<br>Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures<br>Dollars in thousands, except per share amounts<br>The non-GAAP tables below disclose the impact of intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera<br>employees on fiscal 2023 results. We believe the adjustments for Prospera allow for a better investor understanding of Agriculture segment performance<br>related to traditional segment products. Amounts may be impacted by rounding. We believe it is useful when considering company performance for the<br>non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP<br>measures.<br>1Earnings per share includes rounding<br>2The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction<br>Net earnings attributable to Valmont Industries, Inc. - as reported $ 74,540 $ 3.47<br>Intangible asset amortization - Prospera 1,645 0.08<br>Stock-based compensation - Prospera 2,014 0.09<br>Total Adjustments, pre-tax1<br> 3,659 0.17<br>Tax effect of adjustments2<br> (546) (0.03)<br>Net earnings attributable to Valmont Industries, Inc. - Adjusted1 $ 77,653 $ 3.61<br>Average shares outstanding (000’s) - Diluted 21,512<br>April 1, 2023 share<br>Thirteen Diluted<br>weeks ended earnings per | ||||||||||||||
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| 27 April 21, 2023 | Valmont Industries, Inc.<br>Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures<br>Dollars in thousands, except per share amounts<br>Operating Income Reconciliation<br>Operating income - as reported $ 94,352 $ 53,323 $ — $ (29,209) $ 118,466<br>Intangible asset amortization - Prospera — 1,645 — — 1,645<br>Stock-based compensation - Prospera — 2,014 — — 2,014<br>Adjusted Operating Income $ 94,352 $ 56,982 $ — $ (29,209) $ 122,125<br>Net Sales - as reported 732,140 330,341 — — 1,062,481<br>Operating Income as a % of Net Sales 12.9 % 16.1 % NM N M 11.1 %<br>Adjusted Operating Income as a % of Net Sales 12.9 % 17.2 % NM N M 11.5 %<br>Thirteen weeks ended April 1, 2023<br>Infrastructure Agriculture Other Corporate Valmont<br>The non-GAAP tables below disclose the impact of intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera<br>employees on fiscal 2023 results. We believe the adjustments for Prospera allow for a better investor understanding of Agriculture segment performance<br>related to traditional segment products. Amounts may be impacted by rounding. We believe it is useful when considering company performance for the<br>non-GAAP adjusted net earnings and operating income to be taken into consideration by management and investors with the related reported GAAP<br>measures. | ||||||||||||||
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| 28 April 21, 2023 | Valmont Industries, Inc.<br>Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures<br>Dollars in thousands, except per share amounts<br>The non-GAAP tables below disclose the impact of intangible asset amortization (Prospera) and stock-based compensation recognized for<br>the Prospera employees on fiscal 2022 results. We believe the adjustments for Prospera allow for a better investor understanding of<br>Agriculture segment performance related to traditional segment products. Amounts may be impacted by rounding. We believe it is useful<br>when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by<br>management and investors with the related reported GAAP measures.<br>1Earnings per share includes rounding<br>2The tax effect of adjustments is calculated based on the income tax rate in each applicable jurisdiction<br>Net earnings attributable to Valmont Industries, Inc. - as reported $ 62,311 $ 2.90<br>Intangible asset amortization - Prospera 1,645 0.08<br>Stock-based compensation - Prospera 2,498 0.12<br>Total Adjustments, pre-tax1<br> 4,143 0.19<br>Tax effect of adjustments2<br> (566) (0.03)<br>Net earnings attributable to Valmont Industries, Inc. - Adjusted1 $ 65,888 $ 3.07<br>Average shares outstanding (000’s) - Diluted 21,492<br>March 26, 2022 share<br>Thirteen Diluted<br>weeks ended earnings per | ||||||||||||||
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| 29 April 21, 2023 | Valmont Industries, Inc.<br>Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures<br>Dollars in thousands, except per share amounts<br>Operating Income Reconciliation<br>Operating income - as reported $ 78,316 $ 37,475 $ (809) $ (20,140) $ 94,842<br>Intangible asset amortization - Prospera — 1,645 — — 1,645<br>Stock-based compensation - Prospera — 2,498 — — 2,498<br>Adjusted Operating Income $ 78,316 $ 41,618 $ (809) $ (20,140) $ 98,985<br>Net Sales - as reported 658,971 303,195 18,654 — 980,820<br>Operating Income as a % of Net Sales 11.9 % 12.4 % (4.3) % N M 9.7 %<br>Adjusted Operating Income as a % of Net Sales 11.9 % 13.7 % (4.3) % N M 10.1 %<br>Thirteen weeks ended March 26, 2022<br>Infrastructure Agriculture Other Corporate Valmont<br>The non-GAAP tables below disclose the impact of intangible asset amortization (Prospera) and stock-based compensation recognized for<br>the Prospera employees on fiscal 2022 results. We believe the adjustments for Prospera allow for a better investor understanding of<br>Agriculture segment performance related to traditional segment products. Amounts may be impacted by rounding. We believe it is useful<br>when considering company performance for the non-GAAP adjusted net earnings and operating income to be taken into consideration by<br>management and investors with the related reported GAAP measures. | ||||||||||||||
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| 30 April 21, 2023 | Valmont Industries, Inc.<br>Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings<br>Dollars in thousands, except per share amounts<br>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<br>(Prospera) and (2) stock-based compensation for Prospera employees. We believe the adjustments for Prospera allow for a better investor understanding of<br>Agriculture segment performance related to traditional segment products. We believe it is useful when considering company performance for the non-GAAP<br>adjusted net earnings to be taken into consideration by management and investors with the related reported GAAP measures.<br>1 The tax effect of adjustments is calculated based on the estimated income tax rate in each applicable jurisdiction.<br>2 Assumes weighted average shares outstanding of 21.5M, and includes rounding<br>Reconciliation of Range of Net Earnings - 2023 Guidance<br>Estimated net earnings - GAAP $ 318,250 $ 330,050<br>Prospera intangible asset (proprietary technology) amortization, pre-tax 6,600<br>Stock-based compensation - Prospera, pre-tax 9,800<br>Total pre-tax adjustments 16,400<br>Estimated tax benefit from above expenses1<br> (2,450)<br>Total Adjustments, after-tax $ 13,950<br>Estimated net earnings - Adjusted $ 332,200 $ 344,000<br>Diluted Earnings Per Share Range - GAAP2 $ 14.80 $ 15.35<br>Diluted Earnings Per Share Range - Adjusted2 $ 15.45 $ 16.00<br>Low End High End Adjustment | ||||||||||||||
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| 31 April 21, 2023 | Valmont Industries, Inc.<br>Regulation G Reconciliation of Excluding Other Segment Net Sales<br>Dollars in thousands, except per share amounts<br>Excluding Other segment net sales from the first quarter of fiscal 2022, which we refer to in this reconciliation as “Adjusted Net Sales” is a non-GAAP<br>measure. The Other segment net sales were generated by the wind energy structures business which was divested in December 2022. Adjusted Net Sales<br>should not be considered in isolation or as a substitute for net earnings, cash flows from operations or other income or cash flow data prepared in<br>accordance with GAAP, or as a measure of our operating performance or liquidity. The table below shows how Adjusted Net Sales is calculated from our<br>statements of earnings. Adjusted Net Sales is calculated as Net Sales less Other segment net sales. Adjusted Net Sales allows investors to analyze our<br>operating performance in light of the amount of net sales less net sales of a divested business.<br><br>Net sales $ 1,062,481 $ 980,820 8.3%<br>Other segment net sales — 18,654 NM<br>Adjusted net sales $ 1,062,481 $ 962,166 10.4%<br>13 Weeks Ended 13 Weeks Ended<br>04/01/2023 03/26/2022 % Change | ||||||||||||||
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| 32 April 21, 2023 | Valmont Industries, Inc.<br>2013-2022 Historical Free Cash Flow1,2<br>1 Adjusted earnings for purposes of calculating FCF conversion may not agree to the adjusted net earnings. The difference is due to non-recurring expenses which were settled in cash in the year of occurrence as part of net cash flows from operating activities.<br>10 Year Average FCF is $156M; Last 5 Years Has Averaged $138M<br>2 We use the non-GAAP measure of FCF, which we define as GAAP net cash flows from operating activities reduced by capex. We believe that FCF is a useful performance measure for management and useful to investors as the basis for comparing our performance with other<br>companies. Our measure of FCF may not be directly comparable to similar measures used by other companies.<br>($M) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022<br>Net cash flows from operating activities $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 $ 326.3<br>Net cash flows from investing activities (131.7) (256.9) (48.2) (53.0) (49.6) (155.4) (168.1) (104.0) (417.3) (132.1)<br>Net cash flows from financing activities (37.4) (136.8) (32.0) (95.2) (32.0) (162.1) (98.9) (173.8) 133.5 (181.9)<br>Net cash flows from operating activities $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 $ 65.9 $ 326.3<br>Purchase of plant, property, and equipment (106.8) (73.0) (45.5) (57.9) (55.3) (72.0) (97.4) (106.7) (107.8) (93.3)<br> Free cash flows 289.7 101.1 226.8 174.9 77.8 81.0 210.2 209.6 (41.9) 233.0<br>Net earnings attributed to Valmont Industries, Inc. $ 278.5 $ 183.9 $ 40.1 $ 175.5 $ 120.5 $ 101.8 $ 146.4 $ 140.7 $ 195.6 $ 250.9<br>Adjusted free cash flow net earnings attributed to Valmont Industries, Inc. $ 295.1 $ 187.7 $ 131.7 $ 139.9 $ 162.7 $ 130.4 N/A $ 159.8 $ 222.3 $ 284.2<br>Free Cash Flow Conversion - GAAP 1.04 0.55 5.66 1.00 0.65 0.80 1.44 1.49 (0.21) 0.93<br>Free Cash Flow Conversion - Adjusted 0.98 0.53 1.71 1.25 0.48 0.62 N/A 1.31 (0.19) 0.82<br>1) Reconciliation of Net Earnings to Adjusted Figures<br>Net earnings attributed to Valmont Industries, Inc. $ 278.5 $ 183.9 $ 40.1 $ 175.5 $ 120.5 $ 101.8 $ 146.4 $ 140.7 $ 195.6 $ 250.9<br>Loss from divestiture of offshore wind energy structures business - - - - - - - - - 33.3<br>Change in valuation allowance against deferred tax assets - - 7.1 (20.7) 41.9 - - - 5.0 -<br>Impairment of long-lived assets 12.2 - 61.8 1.1 - 28.6 - 19.1 21.7 -<br>Reversal of contingent liability - - (16.6) - - - - - -<br>Other non-recurring expenses (non-cash) - - 18.1 - - - - -<br>Deconsolidation of Delta EMD, after-tax and NCI 4.4 - - - - - - - - -<br>Noncash loss from Delta EMD shares - 3.8 4.6 0.6 0.2 - - - - -<br> Adjusted free cash flow net earnings attributed to Valmont Industries, Inc. $ 295.1 $ 187.7 $ 131.7 $ 139.9 $ 162.7 $ 130.4 $ 146.4 $ 159.8 $ 222.3 $ 284.2 | ||||||||||||||
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| 33 April 21, 2023 | Valmont Industries, Inc.<br>Years of rapid raw material cost inflation<br>GAAP 1.04X 0.55X 5.66X 1.00X 0.65X 0.80X 1.44X 1.49X (0.21X) 0.93X<br>Adj. 0.98X 0.53X 1.71X 1.25X 0.48X 0.62X N/A 1.31X (0.19X) 0.82X<br>2013 – 2022 Free Cash Flow1<br>($M)<br>290<br>101<br>227<br>175<br>78 81<br>210 210<br>(42)<br>233<br>156<br> (100)<br> (50)<br> -<br> 50<br> 100<br> 150<br> 200<br> 250<br> 300<br> 350<br>2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 10 Year<br>Avg<br>10-yr Avg. $156M<br>GAAP 1.33X<br>Adj. 0.83X<br>Historical FCF Conversion by Year1<br>Strong Free Cash Flow throughout the Cycle<br>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<br>companies. Our measure of FCF may not be directly comparable to similar measures used by other companies. | ||||||||||||||
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| 34 April 21, 2023 | Valmont Industries, Inc.<br>Calculation of Adjusted EBITDA and Leverage Ratio<br>Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted<br>EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior<br>four quarters. See “Leverage Ratio “ below.<br>($000s)<br>TTM<br>04/01/2023<br>Net earnings attributable to Valmont Industries, Inc. $ 263,092<br>Interest expense 49,376<br>Income tax expense 117,409<br>Stock-based compensation 41,076<br>Depreciation and amortization expense 97,841<br>EBITDA 568,794<br>Loss on divestiture of offshore wind energy structures business 33,273<br>Adjusted EBITDA - last four quarters $ 602,067<br>Interest-bearing debt, excluding origination fees and discounts of $26,818 $ 1,025,055<br>Less: cash and cash equivalents in excess of $50 million 122,948<br>Net indebtedness $ 902,107<br>Net indebtedness $ 902,107<br>Leverage ratio 1.50<br>Interest-bearing debt $ 1,025,055<br>Total debt to adjusted EBITDA 1.70 | ||||||||||||||
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