Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q3 2021 Earnings Presentation
35 slides from Valmont Industries's earnings presentation, Oct 21, 2021
Slide 1: Third Quarter Earnings Presentation
Valmont Industries, Inc. Third Quarter Earnings Presentation October 21, 2021 © 2021 Valmont® Industries, Inc.
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: Steve Kaniewski, President & Chief Executive Officer
STEVE KANIEWSKI PRESIDENT & CHIEF EXECUTIVE OFFICER 3 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 4: 3Q 2021 Segment Sales and Segment Summaries
3Q 2021 Segment Sales and Segment Summaries TOTAL 3Q 2021 SALES: $868.8M $276.5M $281.1M $96.7M $240.3M Utility Support Engineered Support Coatings Irrigation Structures Structures N.A.: $116.3M | International: $124.0M 31.8% of Sales 32.4% of Sales 11.1% of Sales 27.7% of Sales SEGMENT SUMMARIES •
Slide 5: Conserving Resources and Improving Life in Sudan
Conserving Resources and Improving Life in Sudan Sudan’s Evolving from subsistence farming to industrial scale Agriculture • 40% of GDP Sector1 • 80% of workforce Problems • Arid conditions in the • Lack of direct access to electricity in the region Region Valmont Installed solar plant to bring powe
Slide 6: Avner Applbaum, EVP & Chief Financial Officer
AVNER APPLBAUM EVP & CHIEF FINANCIAL OFFICER 6 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 7: 3Q 2021 Financial Summary
3Q 2021 Financial Summary $M, except for per share amounts Sales Operating Income Diluted EPS GAAP Adjusted1 GAAP Adjusted1 18.4% 23.9% 19.8% 30.4% 29.1% $868.8 $80.4 $2.57 $76.2 $2.40 $67.1 $61.5 $1.99 $1.84 $734.0 2021 2020 2021 2020 2021 2020 2021 2020 2021 2020 • Record third quarter sales as gr
Slide 8: 3Q 2021 Results | Utility Support Structures
3Q 2021 Results | Utility Support Structures ($M) Key Statistics Sales Operating Income1 2020 Sales $ 274.4 0.8% Intersegment Sales (1.9) $276.5 $274.4 Volume (22.3) $29.2 Pricing/Mix 25.6 $25.9 Acquisitions/Divestiture - $24.6 Currency Translation 0.7 2021 Sales $ 276.5 2021 2020 2021 2020 2020 Adj
Slide 9: 3Q 2021 Results | Engineered Support Structures
3Q 2021 Results | Engineered Support Structures ($M) Key Statistics Sales Operating Income1 2020 Sales $ 255.7 9.9% $281.1 Intersegment Sales (0.7) $255.7 $34.4 Volume (1.3) $25.4 $26.3 Pricing/Mix 21.6 Acquisitions/Divestiture - Currency Translation 5.8 2021 Sales $ 281.1 2021 2020 2021 2020 2020 A
Slide 10: 3Q 2021 Results | Coatings
3Q 2021 Results | Coatings ($M) Key Statistics Sales Operating Income1 2020 Sales $ 87.9 10.0% Intersegment Sales 2.6 $13.7 $96.7 $12.5 $12.4 $87.9 Volume 0.5 Pricing/Mix 4.6 Acquisitions/Divestiture - Currency Translation 1.1 2021 Sales $ 96.7 2021 2020 2021 2020 2020 Adj. COMMENTARY • Higher avera
Slide 11: 3Q 2021 Results | Irrigation
3Q 2021 Results | Irrigation ($M) Key Statistics Sales Operating Income1 2020 Sales $ 139.2 53.4% 95.6% Intersegment Sales 2.6 $116.3 $124.0 $32.0 $27.7 Volume 55.7 $75.8 $63.4 Pricing/Mix 39.3 $14.7 Acquisitions/Divestiture 1.2 Currency Translation 2.3 North America International 2021 Sales $ 240.3
Slide 12: 3Q 2021 Cash Flow Highlights
3Q 2021 Cash Flow Highlights 3Q Cash Flow | FCF Reconciliation Cash and Debt Highlights YTD ($M) Net Cash Flows from Operating Activities $ 9/25/2021 61.8 $169.8M Net Cash Flows from Investing Activities (389.5) ($145.0M ex-U.S.) Cash at 9/25/2021 Net Cash Flows from Financing Activities 101.0 Net C
Slide 13: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 2021 YTD Capital Deployment: $449M • 2021 CapEx expected to be $110M - $120M Capital • Investments to support strategic growth initiatives and Expenditures Growing Our Industry 4.0 advanced manufacturing Business $313 • Strategic fit + market expansion Acquisi
Slide 14: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity AS OF SEPTEMBER 25, 20211 Cash $169.8M Available Credit under Revolving Credit Facility2 $615.6M Total Long-Term Debt $897.5M Cash $169.8M Shareholders’ Equity $1,344.7M Total Available Liquidity $785.4M Total Debt to Adj. EBITDA1 1.85x ► Long-term debt of $897.5M,
Slide 15: Full Year 2021 Outlook and Key Assumptions
Full Year 2021 Outlook and Key Assumptions PREVIOUS CURRENT FY21 OUTLOOK1 FY21 OUTLOOK1 KEY ASSUMPTIONS 16% – 19% 17% – 18% • Favorable foreign currency translation impact of Increase in Net Sales Increase in Net Sales ~1% of Net Sales YoY YoY • Expect fourth quarter tax rate of ~24.0% $9.90 – $10.6
Slide 16: 2021 Segment Outlook
2021 Segment Outlook • Expect sequential margin improvement as pricing becomes more aligned with steel cost inflation USS • Backlog indicative of long-term market drivers of grid resiliency and the increasing use of renewable energy • Stable market conditions in North American transportation markets
Slide 17: Fundamental Market Drivers Remain Resilient
Fundamental Market Drivers Remain Resilient USS ESS COATINGS IRRIGATION • Strong backlog demonstrates • Critical need for infrastructure • Closely following industrial • Global ag market fundamentals ongoing demand and necessity investment provides very good production trends remain strong for renew
Slide 18: Summary
Summary Ability to grow sales through innovation and execution while being flexible and 01 responding quickly to meet customer needs Improved operating margins by executing on our pricing strategies and advancing 02 operational excellence across our footprint Invested in our employees and technology
Slide 19: Q&A
Q&A 19 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 20: Appendix
APPENDIX 20 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 21: 3Q 2021 Financial Summary
3Q 2021 Financial Summary $M, except for per share amounts Net Sales 2021 2020 Change YTD 2021 YTD 2020 Change Utility Support Structures $ 276.5 $ 274.4 0.8% $ 797.5 $ 731.2 9.1% Engineered Support Structures 281.1 255.7 9.9% 772.8 739.8 4.5% Coatings 96.7 87.9 10.0% 288.1 256.0 12.5% Irrigation 24
Slide 22: Steel Material Index Trends 2020-2021 YTD
Steel Material Index Trends 2020-2021 YTD Since the last update (July 2nd), the AMM material index has increased from $1,500 to $1,852.9; an increase of 352.9 points or 23.5%. Source: FastMarketsAMM. 22 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 23: State Transportation Investment Funding Measures
State Transportation Investment Funding Measures • State legislators have introduced 198 transportation funding measures in 2021 • Funding Approved in 2021 Legislative Session: $29.55 billion • One-time funding bills, including allocation of federal Covid-19 relief funds, were approved in twelve sta
Slide 24: State Transportation Investment Funding Measures by Type
State Transportation Investment Funding Measures by Type Increased Fuel Tax Electric Vehicle Fee Road Usage Fee Source: Transportation Investment Advocacy Center. 24 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 25: 5G Adoption Forecast and Capex Spend Post-COVID
5G Adoption Forecast and Capex Spend Post-COVID Source: GSM Association. 25 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 26: U.S. Net Farm Income
U.S. Net Farm Income Net Farm Income w/ Government Payments 120 113 100 95 92 82 81 79 80 75 49 85 62 60 82 57 ($B) 71 67 63 40 49 46 20 28 22 10 11 13 12 14 0 2014 2015 2016 2017 2018 2019 2020 2021F Dir. Gov't Payments NFI, less Gov't Payments Source: USDA Farm Income Data 26 October 21, 2021 | Va
Slide 27: U.S. Net Cash Farm Income by Year
U.S. Net Cash Farm Income by Year Source: USDA, American Farm Bureau Federation 27 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 28: 2011-2020 Historical Free Cash Flow
2011-2020 Historical Free Cash Flow1 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 ($M) Net cash flows from operating activities $ 149.7 $ 197.1 $ 396.4 $ 174.1 $ 272.3 $ 232.8 $ 133.1 $ 153.0 $ 307.6 $ 316.3 Net cash flows from investing activities (84.1) (136.7) (131.7) (256.9) (48.2) (53.0) (
Slide 29: Strong Free Cash Flow throughout the Cycle
Strong Free Cash Flow throughout the Cycle 2011 – 2020 Free Cash Flow1 ($M) Years of rapid raw material cost inflation 290 227 210 210 175 10-yr Avg. $154M GAAP 1.34X 100 101 Adj. 0.91X 78 81 67 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Historical FCF Conversion by Year1 GAAP 0.29X 0.43X 1.0
Slide 30: Calculation of Adjusted EBITDA and Leverage Ratio
Calculation of Adjusted EBITDA and Leverage Ratio Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted EBITDA may not exceed 3.5X Adjusted EBITDA (or 3.75X Adjusted EBITDA after certain material acquisitions) of the prior four quarte
Slide 31: Summary of Effect of Significant Non-Recurring Items on Reported Results
Summary of Effect of Significant Non-Recurring Items on Reported Results 31 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 32: Summary of Effect of Significant Non-Recurring Items on Reported Results
Summary of Effect of Significant Non-Recurring Items on Reported Results 32 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 33: Summary of Effect of Significant Non-Recurring Items on Reported Results
Summary of Effect of Significant Non-Recurring Items on Reported Results 33 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 34: Summary of Effect of Significant Non-Recurring Items on Reported Results
Summary of Effect of Significant Non-Recurring Items on Reported Results 34 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation
Slide 35: Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings
Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings 35 October 21, 2021 | Valmont Industries, Inc. | 3Q 2021 Earnings Presentation