Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q3 2022 Earnings Presentation
33 slides from Valmont Industries's earnings presentation, Oct 27, 2022
Slide 1: Third Quarter 2022 Earnings Presentation
Valmont Industries, Inc. Third Quarter 2022 Earnings Presentation October 27, 2022 © 2022 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 27, 2022 | Valmont Industries, Inc.
Slide 4: 3Q 2022 Summary
3Q 2022 Summary • Record sales as strong broad-based demand drove higher volumes despite macroeconomic volatility TOTAL 3Q 2022 SALES • Disciplined pricing strategy to capture delivered value and offset inflation • Record global backlog of $2.0 billion, reflecting strong market demand $1,097.4M; +26
Slide 5: Strategic Pillars Enable Sustainable Business Outcomes
Strategic Pillars Enable Sustainable Business Outcomes EXECUTING OUR THREE STRATEGIC PILLARS BUILDING A MORE RESILIENT BUSINESS • Focused on high-growth and diverse end markets with favorable long-term demand trends Elevating ESG • Targeted investments in innovation that contribute to Operational Ex
Slide 6: Strategically Growing our Solar Market Presence
Strategically Growing our Solar Market Presence • 2018 - Convert Italia acquisition VALMONT • Focus on distributed generation projects SOLAR • Key international markets have more pronounced barriers to entry and favorable legislation • Targeting additional growth in domestic U.S. market • Strong com
Slide 7: Avner Applbaum, EVP & Chief Financial Officer
AVNER APPLBAUM EVP & CHIEF FINANCIAL OFFICER 7 October 27, 2022 | Valmont Industries, Inc.
Slide 8: 3Q 2022 Financial Summary
3Q 2022 Financial Summary SALES ($M) OPERATING INCOME ($M) DILUTED EPS +26.3% GAAP Adjusted1 GAAP Adjusted1 +44.3% +41.9% +39.2% +35.8% $1,097.4 $110.0 $114.1 $3.49 $868.8 $3.34 $76.2 $80.4 $2.57 $2.40 2021 2022 2021 2022 2021 2022 2021 2022 2021 2022 • Mid-single digit volume growth on strong deman
Slide 9: 3Q 2022 Results | Infrastructure
3Q 2022 Results | Infrastructure SALES ($M) OPERATING INCOME ($M) SALES ($M) 2021 2022 % +22.7% +31.0% Transmission, Distribution and $ 239.6 $ 304.8 +27% Substation (TD&S) $778.4 $93.6 Lighting and $634.3 218.0 241.6 +11% Transportation (L&T) $71.4 Coatings 76.8 92.0 +20% Telecommunications 63.1 92
Slide 10: 3Q 2022 Results | Agriculture
3Q 2022 Results | Agriculture SALES ($M) OPERATING INCOME ($M) SALES ($M) 2021 2022 % +36.2% GAAP Adjusted1 North American $ 116.3 $ 178.6 +54% +56.0% +48.4% Irrigation $327.3 $47.4 $240.3 $43.3 International 124.0 148.6 +20% Irrigation $32.0 $27.7 Agricultural 21.4 24.3 +13% Technology2 2021 2022 2
Slide 11: YTD Cash Flow Highlights
YTD Cash Flow Highlights ($M) YTD 9/24/2022 Net Cash Flows from Operating Activities $ 184 Net Cash Flows from Investing Activities (106) Net Cash Flows from Financing Activities (79) Net Cash Flows from Operating Activities $ 184 Purchase of Property, Plant & Equipment (67) Free Cash Flows $ 117 FC
Slide 12: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 2022 YTD Capital Deployment: $161M GROWING OUR BUSINESS RETURNING CASH TO SHAREHOLDERS $67M $39M $20M $34M Capital Expenditures Acquisitions Share Repurchases Dividends • Now expect FY2022 CapEx • Acquired ConcealFab to expand • Opportunistic approach, • 10% d
Slide 13: Strong Balance Sheet and Liquidity
Strong Balance Sheet and Liquidity As of September 24, 2022 Cash $166M Available Credit under Revolving Credit Facility2 $595M Total Long-Term Debt $935M Cash $166M Shareholders’ Equity $1,573M Total Available Liquidity $761M Total Debt to Adj. EBITDA1 1.5x ► Long-term debt mostly fixed-rate, with l
Slide 14: Full Year 2022 Outlook and Key Assumptions
Full Year 2022 Outlook and Key Assumptions PREVIOUS CURRENT KEY ASSUMPTIONS 2022 OUTLOOK1 2022 OUTLOOK1 • Revised net sales growth is primarily to reflect third quarter results ~ $4.2B ~ $4.3B Net Sales Net Sales • Revised Diluted EPS to reflect expected mix of earnings and timing of project deliver
Slide 15: Preliminary 2023 Outlook and Key Assumptions
Preliminary 2023 Outlook and Key Assumptions KEY ASSUMPTIONS 6% – 9% • Steady market demand continues, driving mid-single digit Increase in Net Sales Y/Y volume growth across segments • Stabilized raw material costs • Inflation in-line with global central bank expectations • Continued growth in R&D
Slide 16: Fundamental Market Drivers Remain Resilient
Fundamental Market Drivers Remain Resilient INFRASTRUCTURE AGRICULTURE • Long term need for critical infrastructure investment globally, • Favorable market conditions, including elevated commodity prices supported by current and future stimulus and positive farmer sentiment are leading to increasing
Slide 17: Summary
Summary Ability to grow sales through innovation and execution while being flexible and responding 1 quickly to meet customer needs Financial strength and flexibility by executing on our pricing strategies and advancing operational 2 excellence across our footprint Investing in our employees and tec
Slide 18: Q&A
Q&A 18 October 27, 2022 | Valmont Industries, Inc.
Slide 19: Appendix
APPENDIX 19 October 27, 2022 | Valmont Industries, Inc.
Slide 20: 3Q 2022 Financial Summary
3Q 2022 Financial Summary $M, except for per share amounts Net Sales 2022 2021 Change YTD 2022 YTD 2021 Change Infrastructure $ 778.4 $ 634.3 22.7% $ 2,224.0 $ 1,801.5 23.5% Agriculture 327.3 240.3 36.2% 1,011.6 752.0 34.5% Intersegment Sales1 (8.3) (5.8) NM (21.9) (15.2) NM Net Sales $ 1,097.4 $ 86
Slide 21: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures The non-GAAP tables below disclose the impact of intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera employees on fiscal 2022 results. We believe the adjustments for Prospera al
Slide 22: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures 22 October 27, 2022 | Valmont Industries, Inc.
Slide 23: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures The non-GAAP tables below disclose the impact of intangible asset amortization (Prospera) and stock-based compensation recognized for the Prospera employees on fiscal 2021 results. We believe the adjustments for Prospera al
Slide 24: Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures
Reconciliation of Non-GAAP Financial Measures to Reported Financial Measures 24 October 27, 2022 | Valmont Industries, Inc.
Slide 25: Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings
Regulation G Reconciliation of Forecasted GAAP and Adjusted Earnings (Dollars in thousands, except per share amounts) 25 October 27, 2022 | Valmont Industries, Inc.
Slide 26: Historical Segment Financials
Historical Segment Financials 2021 2020 Q1 Q2 Q3 Q4 FY FY Sales: Infrastructure segment $ 549,646 $ 617,604 $ 634,283 $ 693,568 $ 2,495,101 $ 2,261,804 Agriculture segment 229,664 281,965 240,331 276,757 1,028,717 645,831 Total 779,310 899,569 874,614 970,325 3,523,818 2,907,635 Intersegment Sales:
Slide 27: Infrastructure Investment and Jobs Act (IIJA)
Infrastructure Investment and Jobs Act (IIJA) Infrastructure Investment and Jobs Act Spending Breakdown (In Order - Most to Least) Previously-Passed Transportation Funding | $650B Roads, Bridges and Related Programs | $111B Energy, Power and Electric Grid Reliability | $107.5B Freight and Passenger
Slide 28: 5G Adoption and Capex Spend Forecasts
5G Adoption and Capex Spend Forecasts Source: GSM Association 28 October 27, 2022 | Valmont Industries, Inc.
Slide 29: U.S. Net Cash Farm Income by Year
U.S. Net Cash Farm Income by Year Source: USDA (September 1, 2022) 29 October 27, 2022 | Valmont Industries, Inc.
Slide 30: U.S. Drought Condition
U.S. Drought Condition Source: Drought Monitor (October 20, 2022) 30 October 27, 2022 | Valmont Industries, Inc.
Slide 31: 2012-2021 Historical Free Cash Flow
2012-2021 Historical Free Cash Flow1 ($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) (1
Slide 32: Strong Free Cash Flow throughout the Cycle
Strong Free Cash Flow throughout the Cycle 2012 – 2021 Free Cash Flow1 ($M) Years of rapid raw material cost inflation 350 300 290 250 227 210 210 200 175 143 150 100 101 10-yr Avg. $143M 100 78 81 GAAP 1.28X 50 Adj. 0.84X - (50) (42) (100) 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 10 Year A
Slide 33: 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