Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q3 2017 Earnings Presentation
17 slides from Valmont Industries's earnings presentation, Oct 19, 2017
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 Third Quarter Highlights
3 Net Sales grew 12% with increases in all segments except Energy and Mining Operating income grew 13% (2.7% adjusted) Operating income as a percent of sales is 8.8% in 2017 compared to 8.7% in 2016 (9.6% adjusted) GAAP Diluted earnings per share increase 25% from $1.24 to $1.55, adjusted diluted EP
Slide 3: Third Quarter Financial Summary
4 NET SALES U.S. Dollars in millions except per share amounts 2017 2016 Percent Change Engineered Support Structures $221.5 $203.2 9.0% Utility Support Structures 179.8 150.6 19.4% Coatings 82.6 70.1 17.8% Energy & Mining 79.8 81.5 (2.1%) Irrigation 147.4 127.8 15.3% Intersegment Sales (30.3) (23.0)
Slide 4: Financial Highlights – Operating Income GAAP
5 U.S. Dollars in millions Operating Income 3Q 2017 Operating Income 3Q 2016 Increase (Decrease) Operating Income % 3Q 2017 Operating Income % 3Q 2016 Engineered SupportStructures $16.2 $20.3 (20.2%) 7.3% 10.0% Utility Support Structures 22.1 16.2 36.4% 12.3% 10.8% Coatings 14.6 11.7 24.8% 17.6% 16.
Slide 5: Financial Highlights – Operating Income Adjusted
6 U.S. Dollars in millions AdjustedOperating Income 3Q 2017* Adjusted Operating Income 3Q 2016* Increase (Decrease) Operating Income % 3Q 2017 Operating Income % 3Q 2016 Engineered SupportStructures $16.2 $20.9 (22.5%) 7.3% 10.3% Utility Support Structures 22.1 16.7 32.3% 12.3% 11.1% Coatings 14.6 1
Slide 6: Engineered Support Structures Segment
7 Engineered Support Structures Segment 2016 Revenue $193.1 Volume 15.9 Pricing/Mix (3.5) Acquisitions 1.6 Currency Translation 2.7 2017 Revenue $209.8 Lower traffic and lighting sales in North America, lack of announced infrastructure spending plan. European markets show signs of stabilizing. Wirel
Slide 7: Utility Support Structures Segment
8 Utility Support Structures Segment 2016 Revenue $150.4 Volume 1.6 Pricing/Mix 26.5 Acquisitions - Currency Translation - 2017 Revenue $178.5 Sales increased in both steel and concrete in North America. Increased pricing to reflect higher steel costs Some Q3 volume shift due to hurricanes Operating
Slide 8: Coatings Segment
9 Coatings Segment 2016 Revenue $60.0 Volume 1.5 Pricing/Mix 5.6 Acquisitions - Currency Translation 0.6 2017 Revenue $67.7 Sales and volumes increase, pricing better matched to costs Greater sales mix of intercompany activity helped volume loading of plants Improved profitability due to price recov
Slide 9: Energy and Mining Segment
10 Energy and Mining Segment 2016 Revenue $81.2 Volume (6.9) Pricing/Mix 2.0 Acquisitions - Currency Translation 3.4 2017 Revenue $79.7 Revenue modestly lower than last year Operating income decreased from less favorable steel cost environment in mining consumables business $ in millions * See recon
Slide 10: Irrigation Segment
11 Irrigation Segment 2016 Revenue $125.5 Volume 17.6 Pricing/Mix 1.1 Acquisitions - Currency Translation 0.9 2017 Revenue $145.1 Solid international organic and project growth North America markets exhibit traditional Q3 profile Higher operating income from strong international demand and favorable
Slide 11: Free Cash Flow
Free Cash Flow 12 2017 2016 Operating Cash Flow $134.4 $127.3 CapEx (39.9) (42.2) Free Cash Flows $94.5 $85.1 Net Earnings $119.9 $103.2 Free Cash Flows to Net Earnings 0.79 0.82 Stated Goal – Free Cash Flow 1.0X Net Earnings Free cash flow to net earnings expected to be near 1.0X for 2017 Dependent
Slide 12: Cash and Debt Highlights
3Q 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 $95M YTD Cash At 9/30/2017 $493M ($370M Ex. US) Total Debt $755M Debt/Adjusted EBITDA* 2.19 Adjusted S&P BBB+ Stable Moody’s Baa3 Stable * See the Company
Slide 13: Calculation of Adjusted EBITDA & Leverage Ratio
Calculation of Adjusted EBITDA & Leverage Ratio 14 Last 4 fiscal quarters (September 25, 2016 to September 30, 2017) 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 of the prior four qu
Slide 14: Summary of Effect of Significant Non-recurring Items on Reported Results
Summary of Effect of Significant Non-recurring Items on Reported Results 15 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
Slide 15: Summary of Effect of Significant Non-recurring Items on Reported Results
16 Summary of Effect of Significant Non-recurring Items on Reported Results For the Third Quarter Ended Sept. 24, 2016 Operating Income Reconciliation Operating Income- As Reported Restructuring expenses - before tax Adjusted Operating Income Net Sales Engineered Support Structures $ 20,323 $ 587 $
Slide 16: Condensed Consolidated Statements of Earnings
17 Summary of Effect of Significant Non-recurring Items on Reported Results VALMONT INDUSTRIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (Dollars in thousands, except per share amounts) (unaudited) Third Quarter Year-to-Date 13 Weeks Ended 39 Weeks Ended 30-Sep-17 24-Sep-1
Slide 17: Summary of Effect of Significant Non-recurring Items on Reported Results
Summary of Effect of Significant Non-recurring Items on Reported Results Oneatae Resonciliat Operating income - as reported Restructuring expenses Adjusted Operating Income Net Sales Operating Income as a % of Sales Third Quarter Ended Year-to-Date Sept. 24, 2016 Sept. 24, 2016 8 53,240 $ 187,411 5,