Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q1 2020 Earnings Presentation
30 slides from Valmont Industries's earnings presentation, Apr 23, 2020
Slide 1: First Quarter Earnings Presentation
Valmont Industries, Inc. First Quarter Earnings Presentation April 23, 2020
Slide 2: Disclosure Regarding Forward-Looking Statements
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 f
Slide 3: 1Q 2020 Segment Revenue and Segment Summaries
1Q 2020 Segment Revenue and Segment Summaries TOTAL 1Q 2020 REVENUE: $674.2M $230.7M $225.5M $88.1M $156.7M Engineered Support Utility Support Coatings Irrigation Structures Structures N.A.: $106.6M | International: $50.1M 34.2% of Sales 33.4% of Sales 13.1% of Sales 23.2% of Sales SEGMENT SUMMARIES
Slide 4: COVID-19 Pandemic Plan and Safety Protocols
COVID-19 Pandemic Plan and Safety Protocols Valmont has implemented enhanced protocols in response to COVID-19, including recommendations and requirements issued by the Centers for Disease Control and Prevention (“CDC”), World Health Organization (“WHO”) and local, state and national health authorit
Slide 5: Key Observations Related to COVID-19
Key Observations Related to COVID-19 • Valmont products and solutions support critical infrastructure sectors as defined by the Department of Homeland 01 Security (CISA.gov) and similar global government agencies. − Communication: Wireless communication structures and components (ESS) − Energy: Util
Slide 6: Future Impact of COVID-19 Varies Across Diversified Portfolio
Future Impact of COVID-19 Varies Across Diversified Portfolio Valmont FY2019 Segment Operating Income ($M) Estimated Risk Profile Due to COVID-19 UTILITY ESS • Supports critical infrastructure sector (Energy) to help ensure • Variety of demand drivers across multiple product lines and geographies un
Slide 7: Strategic Actions to Enhance Our Operations
Strategic Actions to Enhance Our Operations Safety Measures Already in Place to Combat COVID-19 • Large production areas and products allow for safe distancing and limited exposure between employees • Factory automation reduces amount of contact between employees • Additional safeguards established:
Slide 8: 2020 First Quarter Summary
2020 First Quarter Summary $M, except for per share amounts Revenue Operating Income Diluted EPS (2.6%) +22.5% +21.3% $66.9 $1.99 $692.1 $54.6 $674.2 $1.64 2020 2019 2020 2019 2020 2019 • Strong North American sales across most • Led by 370 bps GP improvement across segments, • 2019 reflects an 18¢
Slide 9: 1Q Results | Engineered Support Structures
1Q Results | Engineered Support Structures ($M) Key Statistics Revenue Operating Income 2019 Revenue1 $ 228.0 Volume 2.2 $227.4 $228.0 Pricing/Mix 1.2 $15.9 $12.5 Acquisitions/Divestiture 1.4 Currency Translation (5.4) 2020 Revenue1 $ 227.4 2020 2019 2020 2019 COMMENTARY • Solid growth of lighting &
Slide 10: 1Q Results | Utility Support Structures
1Q Results | Utility Support Structures ($M) Key Statistics Revenue Operating Income 2019 Revenue1 $ 243.2 Volume (21.3) $243.2 $27.7 $222.9 $25.1 Pricing/Mix 1.7 Acquisitions/Divestiture - Currency Translation (0.7) 2020 Revenue1 $ 222.9 2020 2019 2020 2019 COMMENTARY • Sales decreased 7.6% compare
Slide 11: 1Q Results | Coatings
1Q Results | Coatings ($M) Key Statistics Revenue Operating Income 2019 Revenue1 $ 70.2 Volume 0.6 $68.6 $70.2 $11.1 Pricing/Mix (0.8) $10.1 Acquisitions/Divestiture - Currency Translation (1.4) 2020 Revenue1 $ 68.6 2020 2019 2020 2019 COMMENTARY • Higher volumes in North American markets were offse
Slide 12: 1Q Results | Irrigation
1Q Results | Irrigation ($M) Key Statistics Revenue Total Operating Income 2019 Revenue1 $ 150.7 Volume 11.6 $105.2 $106.4 $23.7 Pricing/Mix (2.3) $20.1 $50.1 $44.3 Acquisitions/Divestiture (2.0) Currency Translation (2.7) North America International 2020 Revenue1 $ 155.3 2020 2019 2020 2019 COMMENT
Slide 13: 1Q 2020 Cash Flow Highlights
1Q 2020 Cash Flow Highlights 1Q Cash Flow | FCF Reconciliation Cash and Debt Highlights YTD ($M) 03/28/2020 $294.6M Net Cash Flows from Operating Activities $ 62.4 ($145.9M ex-U.S.) Net Cash Flows from Investing Activities (33.1) Cash at 03/28/2020 Net Cash Flows from Financing Activities (79.0) Net
Slide 14: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation ($M) 1Q 2020 Capital Deployment: $61M • Working capital investment to support investments in Capital people, technology and systems Expenditures • 2020 CapEx expected to be $75 - $90M $24 • Strategic fit + market expansion $20 Business • Returns exceeding cost
Slide 15: Strong Balance Sheet and Liquidity to Endure COVID-19 Uncertainty
Strong Balance Sheet and Liquidity to Endure COVID-19 Uncertainty AS OF APRIL 21, 2020 Cash1 $350.0M Available Credit under Revolving 4 $470.0M Total Debt (Long-Term) 2 $796.6M Credit Facility Shareholders’ Equity2 $1,110.1M Cash 350.0M Total Debt to Adj. EBITDA3 2.4x Total Available Liquidity $820.
Slide 16: 2Q 2020 Outlook and Assumptions
2Q 2020 Outlook and Assumptions BACKGROUND • Strong Q1 performance – was on track to reaffirm FY2020 outlook • Given current market conditions due to COVID-19 and future market uncertainty, we are withdrawing full-year 2020 guidance • 2Q19 non-recurring items: $3M Coatings legal expense and $3M Util
Slide 17: 2Q 2020 Segment Market Drivers
2Q 2020 Segment Market Drivers • Solid transportation market demand from continued government investments in infrastructure development (i.e., lighting and traffic) ESS • Continued solid demand for wireless communication although sales in the quarter can be impacted by timing of shipments • Lower sa
Slide 18: Fundamental Market Drivers
Fundamental Market Drivers ESS USS COATINGS IRRIGATION • Continued government • Our record backlog suggests • Business closely follows • Our mission-critical products investments in infrastructure ongoing demand and necessity industrial production trends and technology supports the development acros
Slide 19: Summary
Summary Our team remains positive, flexible and committed to delivering strong results despite current market 01 environment Strategic cost cutting initiatives through transformation and restructuring efforts over past five years 02 have better positioned us to withstand economic downturns 03 Abilit
Slide 20: Question and Answer
QUESTION AND ANSWER 20 | April 23, 2020 | Valmont Industries, Inc. | 1Q 2020 Earnings Presentation
Slide 21: Appendix
APPENDIX 21 | April 23, 2020 | Valmont Industries, Inc. | 1Q 2020 Earnings Presentation
Slide 22: 1Q 2020 Financial Summary
1Q 2020 Financial Summary $M, except for per share amounts Net Sales 2020 2019 Change Engineered Support Structures $ 230.7 $ 230.3 0.2% Utility Support Structures 225.5 243.9 (7.6%) Coatings 88.1 86.8 1.5% Irrigation 156.7 152.8 2.6% Intersegment Sales (26.8) (21.7) NM Net Sales $ 674.2 $ 692.1 (2.
Slide 23: 2018-2019 Financials Retrospectively Adjusted from LIFO to FIFO Change
2018-2019 Financials Retrospectively Adjusted from LIFO to FIFO Change Valmont Industries, Inc. Retrospectively Adjusted from LIFO to FIFO Change First Quarter 2019 Second Quarter 2019 Third Quarter 2019 Fourth Quarter 2019 Fiscal Year 2019 As Previously Retrospectively As Previously Retrospectively
Slide 24: European and UK Construction PMI
European and UK Construction PMI Source: IHS Markit 24 | April 23, 2020 | Valmont Industries, Inc. | 1Q 2020 Earnings Presentation
Slide 25: Australia Industry Trends 2019-2020
Australia Industry Trends 2019-2020 PBI – Business Performance PCI – Construction Performance Source: Australian Industry Group 25 | April 23, 2020 | Valmont Industries, Inc. | 1Q 2020 Earnings Presentation
Slide 26: COVID-19 Impacts on Commodity Prices
COVID-19 Impacts on Commodity Prices 26 | April 23, 2020 | Valmont Industries, Inc. | 1Q 2020 Earnings Presentation
Slide 27: U.S. Net Cash Farm Income by Year
U.S. Net Cash Farm Income by Year 27 | April 23, 2020 | Valmont Industries, Inc. | 1Q 2020 Earnings Presentation
Slide 28: 2010-2019 Historical Free Cash Flow
2010-2019 Historical Free Cash Flow1 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 ($M) Net cash flows from operating activities $ 152.2 $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 Net cash flows from investing activities (262.7) (84.1) (136.7) (131.7) (256.9) (48.2)
Slide 29: Strong Free Cash Flow Throughout The Cycle
Strong Free Cash Flow Throughout The Cycle 1 2010 – 2019 Free Cash Flow ($M) Years of rapid raw material cost inflation 350 300 250 290 10-yr Avg. $144M 200 227 GAAP 1.31X 210 Adj. 0.91X 150 175 100 144 116 100 101 81 50 67 78 - 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 10 Year Avg Historica
Slide 30: Calculation of Adjusted EBITDA & Leverage Ratio
Calculation of Adjusted EBITDA & Leverage Ratio Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior four quarters