Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q4 2017 Earnings Presentation
21 slides from Valmont Industries's earnings presentation, Feb 22, 2018
Slide 1: Forward-looking Statement Disclosure
2 These slides contain (and the accompanying oral discussion will contain) “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks. uncertainties and other factors that could cause the actual results of
Slide 2: 2017 Fourth Quarter Highlights
3 Net Sales grew 6% with increases in all reportable segments GAAP operating income grew 13.6%. Operating income as a percent of sales was 8.9% in 2017 compared to 8.3% in 2016 (9.4% adjusted in 2016) GAAP diluted loss per share of $0.16 compared to earnings per share of $3.10 in 2016 Adjusted dilut
Slide 3: Fourth Quarter Financial Summary
4 NET SALES U.S. Dollars in millions except per share amounts 2017 2016 Percent Change Engineered Support Structures $250.1 $244.3 2.4% Utility Support Structures 243.4 213.6 14.0% Coatings 83.1 75.5 10.1% Irrigation 149.5 136.6 9.4% Other 15.8 21.9 (27.9%) Intersegment Sales (26.9) (17.3) NM Net Sa
Slide 4: Financial Highlights – Operating Income GAAP
5 U.S. Dollars in millions Operating Income 4Q 2017 Operating Income 4Q 2016 Increase (Decrease) Operating Income % 4Q 2017 Operating Income % 4Q 2016 Engineered Support Structures $16.2 $16.5 (1.7%) 6.5% 6.8% Utility Support Structures 28.4 22.6 25.7% 11.7% 10.7% Coatings 14.1 9.5 48.9% 17.0% 12.5%
Slide 5: Financial Highlights – Operating Income Adjusted for 2016
6 U.S. Dollars in millions Operating Income 4Q 2017 (no-adjustments) Adjusted Operating Income 4Q 2016* Increase (Decrease) Operating Income % 4Q 2017 Operating Income % 4Q 2016 Engineered Support Structures $16.2 $22.7 (28.3%) 6.5% 9.3% Utility Support Structures 28.4 22.6 25.7% 11.7% 10.6% Coating
Slide 6: Utility Support Structures Segment
8 Utility Support Structures Segment 2016 Revenue1 $213.6 Volume (0.6) Pricing/Mix 27.2 Acquisitions - Currency Translation 2.7 2017 Revenue1 $242.9 Sales improved on strong demand in North America and price recovery of higher steel costs International sales lower from large 2016 project that did no
Slide 7: Coatings Segment
9 Coatings Segment 2016 Revenue1 $61.7 Volume (3.9) Pricing/Mix 6.7 Acquisitions - Currency Translation 0.8 2017 Revenue1 $65.3 Sales and operating income improved over last year Pricing to recover zinc cost increases mostly drove higher revenue Operating income improved from favorable SG&A comparis
Slide 8: Irrigation Segment
10 Irrigation Segment 2016 Revenue1 $135.1 Volume 9.3 Pricing/Mix 3.0 Acquisitions - Currency Translation 0.3 2017 Revenue1 $147.7 Global irrigation sales higher from project activity and continued elevated demand in core international markets North America sales comparable to 2016, reflecting littl
Slide 9: 2017 Results Compared With Stated Goals
11 2017 Results Compared With Stated Goals Metric Goal 2017 Result GAAP 2017 Result Adjusted Revenue Growth 5-10% 8.9% 8.9% EPS Growth > 10% (33.0%) 8.6%* ROIC (after-tax) > 10% 7.7% 10.3%* Free Cash Flow Conversion > 1.0x net earnings 0.78x 0.57x* * See reconciliation of non-GAAP/GAAP measures at t
Slide 10: Free Cash Flow and Conversion – 2017 & 2016
Free Cash Flow and Conversion – 2017 & 2016 12 2017 2016 Operating Cash Flow 145.7 219.2 CapEx (55.3) (57.9) Free Cash Flows $90.4 $161.3 Adjusted Net Earnings * $158.4 $145.8 Free Cash Flows to Adj. Net Earnings 0.6 1.1 Stated Goal – 1.0X * See reconciliation of GAAP figures to Non-GAAP figures at
Slide 11: Cash and Debt Highlights
4Q 2017 Actual Credit Rating 13 Cash and Debt Highlights Goal: Maintain Investment-grade rating; Keep Debt/EBITDA from 1.5 to 2.5x Free Cash Flow $90M YTD Cash At 12/30/17 $493M ($405M Ex. US) Total Debt $755M Debt/Adjusted EBITDA* 2.15X S&P BBB+ Stable Moody’s Baa3 Stable * See the Company’s calcul
Slide 12: 2018 Guidance
2018 diluted EPS of approximately $7.70 Adjusted diluted EPS of approximately $8.00 Adjusted does not include 2018 restructuring impacts Any effect from the divestiture of grinding media business not included in guidance 2018 Guidance 14 Assumptions: Revenue growth 7% Excludes acquisitions and impac
Slide 13: Calculation of Adjusted EBITDA & Leverage Ratio
Calculation of Adjusted EBITDA & Leverage Ratio 15 Last 4 fiscal quarters (January 1, 2017 to December 30, 2017) Certain of our debt agreements contain covenants that require us to maintain certain coverage ratios. Our Debt/Adjusted EBITDA may not exceed 4.5X Adjusted EBITDA of the prior four quarte
Slide 14: Valmont – Calculation of Return on Invested Capital
16 Valmont – Calculation of Return on Invested Capital The adjusted tax for 2017 excludes the $41,935 of tax expense associated with the 2017 Tax Act. The effective tax rate in 2017 including these items is 46.5% Return on Invested Capital is calculated as Operating Income (after-tax) divided by the
Slide 15: Summary of Effect of Significant Non-recurring Items on Reported Results
Summary of Effect of Significant Non-recurring Items on Reported Results 17 Fourth Quarter Ended Dec. 30, 2017 Diluted earnings per share Year-to-Date Dec. 30, 2017 Diluted earnings per share Net (loss)/earnings attributable to Valmont Industries, Inc. - as reported (3,611) $ (0.16) $ 116,240 $ 5.11
Slide 16: Summary of Effect of Significant Non-recurring Items – Operating Income Reconciliation
18 Summary of Effect of Significant Non-recurring Items on Reported Results Operating Income Reconciliation Year-to-Date Dec. 31, 2016 Operating income (loss) - as reported 243,504 $ Restructuring expenses 12,425 Adjusted Operating Income 255,929 $ Net Sales 2,521,676 $ Operating Income as a % of Sa
Slide 17: Valmont – Recast 2015 and 2016 Segment Figures by Quarter
Valmont – Recast 2015 Segment Figures Valmont – Recast 2016 Segment Figures by Quarter We believe it is useful when considering Company performance for the non-GAAP adjusted net earnings to be considered by management and investors with the related reported GAAP measures. Unaudited and in 000's Segm
Slide 18: Valmont – Recast 2015 and 2016 Segment Figures (Cont.)
Valmont – Recast 2015 Segment Figures (Cont.) Valmont – Recast 2016 Segment Figures (Cont.) Unaudited and in 000's Segment Operating Income Reconciliation Engineered Support Structures Utility Support Structures Coatings Irrigation Other LIFO/ Corporate TOTAL Operating income (loss) - as reported 20
Slide 19: Valmont – Recast 2015 and 2017 Segment Figures by Quarter
Valmont – Recast 2015 Segment Figures Valmont – Recast 2017 Segment Figures by Quarter We believe it is useful when considering Company performance for the non-GAAP adjusted net earnings to be considered by management and investors with the related reported GAAP measures. Unaudited and in 000's Segm
Slide 20: Valmont – Recast 2015 and 2017 Segment Figures (Cont.)
Valmont – Recast 2015 Segment Figures (Cont.) Valmont – Recast 2017 Segment Figures (Cont.) Unaudited and in 000's Segment Operating Income Reconciliation Engineered Support Structures Utility Support Structures Coatings Irrigation Other LIFO/ Corporate TOTAL Operating income (loss) - as reported 17
Slide 21: Valmont — Recast 2017 Segment Figures (Cont.)
Valmont — Recast 2017 Segment Figures (Cont.) Unaudited and in 00's ‘Ear the Third Quarter Ended Sept. 30.2017 Engineered Utility Support Support Luror ‘Scement Operating Income Reconciliation Structures Structures Coatings Anjigation Other Corporate TOTAL (Operating income (oss) - 8 reported SINS $