Valmont Industries, Inc. · NYSE:VMI
Valmont Industries — Q4 2016 Earnings Presentation
22 slides from Valmont Industries's earnings presentation, 2017
Slide 1: 4Q 2016 Earnings Call Presentation
4Q 2016 Earnings Call Presentation Valmont Industries. Inc. | 2016 Investor Day
Slide 2: Forward-looking Statement Disclosure
Forward-looking Statement Disclosure 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 tha
Slide 3: Fourth Quarter Highlights
Fourth Quarter Highlights Revenues grew 6.4% with gains in Engineered Support Structures, Utility Support Structures and Energy and Mining Irrigation revenues unchanged. Lower North American sales offset by higher international sales GAAP Operating income rises to $56 million from a loss of $1
Slide 4: Financial Highlights—Fourth Quarter
Financial Highlights—Fourth Quarter NET SALES 2016 2015 Percent Dollars in millions except per share amounts Change Engineered Support Structures $216.5 $193.4 11.9% Utility Support Structures 185.1 170.6 8.5% Coatings 75.5 75.7 (0.3%) Energy & Mining 87.9 78.8 11.5% Irrigation 136.6 137.6 (0.7%) Ot
Slide 5: Financial Highlights Operating Income GAAP
Financial Highlights Operating Income GAAP Dollars in millions Operating Operating Increase Operating Operating Income 4Q Income 4Q /Decrease Income Percent Income Percent 2016 2015 4Q 2016 4Q 2015 Engineered Support $16.6 $13.9 18.7% 7.6% 7.2% Structures Utility Support 20.8 (2.4) NM 11.2% (1.4%) S
Slide 6: Financial Highlights Operating Income Adjusted
Financial Highlights Operating Income Adjusted* Dollars in millions Adjusted Adjusted Increase Operating Operating Operating Operating /Decrease Income Percent Income Percent Income 4Q Income 4Q 4Q 2016* 4Q 2015* 2016 * 2015 * Engineered Support $19.2 $18.0 5.6% 8.8% 9.3% Structures Utility Support
Slide 7: Engineered Support Structures
Engineered Support Structures $ in millions Revenue Operating Income* 2015 Revenue $193.4 $24 $250 $216.4 $19.2 $193.4 $16.6 $18.0 Volume 27.4 $200 $18 $13.9 Pricing/Mix (3.4) $150 $12 $100 Acquisitions - $50 $6 Currency Translation (1.0) $‐ $‐ 2016 Revenue $216.4 2016 2015 2016 GAAP 2016 Adj 2015 G
Slide 8: Utility Support Structures
Utility Support Structures $ in millions 2015 Revenue $170.6 $205 Revenue $25 Operating Income * $185.1 $20.8 $20.7 Volume 10.1 $185 $20 $16.1 $170.6 Pricing/Mix 4.4 $15 $165 Acquisitions - $10 $145 $5 Currency Translation - $‐ $125 $(5) 2016 Revenue $185.1 2016 2015 2016 GAAP 2016 Adj $(2.4) 2015 G
Slide 9: Coatings
Coatings $ in millions Revenue * 2015 Revenue $75.7 $78 $75.5 $75.7 Volume (1.6) $76 Pricing/Mix 1.0 $74 Acquisitions - $72 Currency Translation 0.4 $70 $68 2016 Revenue $75.5 20162 2015 • Stronger: Bridge and Highway, Utility • Weaker: Solar • Greater mix of internal volumes • Rising zinc costs – s
Slide 10: Energy and Mining
Energy and Mining $ in millions Revenue Operating Income* 2015 Revenue $78.8 $90 $87.9 $10 $6.3 $2.7 Volume 7.5 $5 $0.5 $85 $‐ Pricing/Mix 0.5 $(5) $78.8 Acquisitions - $80 $(10) $(15) Currency Translation 1.2 $75 $(20) $(25) $(21.5) 2016 Revenue $87.9 $70 2016 GAAP 2016 Adj 2015 GAAP 2015 Adj. 2016
Slide 11: Irrigation
Irrigation $ in millions Revenue Operating Income* 2015 Revenue $137.6 $140 $137.6 $20 $136.6 $16.9 $17.5 $16.2 Volume (2.1) $135 Pricing/Mix 0.6 $15 $130 Acquisitions - $10 $8.3 Currency Translation 0.5 $125 $120 $5 2016 Revenue $136.6 2016 2015 $- 2016 2016 Adj. 2015 GAAP 2015 Adj • North America
Slide 12: 2016 Results Compared With Stated Goals
2016 Results Compared With Stated Goals 2016 Result Metric Goal 2016 Result GAAP Adjusted Revenue Growth 5-10% (3.7%) (3.7%) EPS Growth > 10% 346% 14.0%* ROIC (after-tax) > 10% 11.0% 10.0%* Free Cash Flow > 1.0x net 0.93x 1.10x* Conversion earnings * See the Company’s calculation of these financial
Slide 13: Free Cash Flow and Conversion – 2016 & 2015
Free Cash Flow and Conversion – 2016 & 2015 Stated Goal – 1.0X Dollars in Millions 2016 2015 Operating Cash Flow 219.2 272.3 CapEx (57.9) (45.5) Free Cash Flows $161.3 $226.8 Adjusted Net Earnings * $145.8 $131.8 Free Cash Flows to Adj. Net Earnings 1.1 1.7 • Fourth quarter free cash flow strong wit
Slide 14: Balance Sheet – 4Q 2016
Balance Sheet – 4Q 2016 Goal: Maintain Investment-grade rating; Keep Debt/EBITDA from 1.5 to 2.5x 4Q 2016 Actual Credit Rating Free Cash Flow $161M YTD S&P BBB+ Negative Cash At 12/31/16 $400M ($327 Ex. US) Moody’s Baa3 Stable Total Debt $756M Debt Maturities – in Millions Debt/Adjusted 2.32X Adjust
Slide 15: 2017 Guidance
2017 Guidance EPS growth of 10% over 2016 adjusted EPS of $6.42* 2016 GAAP EPS was $7.63 Assumptions: – Revenue growth expected for all segments; average 5% for the corporation, excluding acquisitions – Raw Materials Raw materials costs up early in year, moderate later in 2017 – Foreign Exch
Slide 16: Summary of Effect of Significant Non-recurring Items on Reported Results
Valmont – Summary of Effect of Significant Non-recurring Items on Reported Results Valmont – Recast 2015 Segment Figures VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS REGULATION G RECONCILIATION (Dollars in thousands, except per sh
Slide 17: Summary of Effect of Significant Non-recurring Items on Reported Results
Valmont – Summary of Effect of Significant Non-recurring Items on Reported Results VALMONT INDUSTRIES, INC. AND SUBSIDIARIES Valmont – Recast 2015 Segment Figures SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED RESULTS REGULATION G RECONCILIATION (Dollars in thousands, except per sh
Slide 18: Summary of Effect of Significant Non-recurring Items on Reported Results
Valmont – Summary of Effect of Significant Non-recurring Items on Reported Results VALMONT INDUSTRIES, INC. AND SUBSIDIARIES SUMMARY OF EFFECT OF SIGNIFICANT NON-RECURRING ITEMS ON REPORTED OPERATING INCOME REGULATION G RECONCILIATION (Continued) Year-to-Date Year-to-Date Increase 2016 Operating Inc
Slide 19: Summary of Effect of Significant Non-recurring Items on Reported Results
Valmont – Summary of Effect of Significant Non-recurring Items on Reported Results For the Fourth Quarter Ended Dec. 31, 2016 Operating Restructuring Adjusted Income- As expenses - before Operating Segment Operating Income Reconciliation Reported tax Income Net Sales Engineered Support Structures $
Slide 20: Summary of Effect of Significant Non-recurring Items on Reported Results
Valmont – Summary of Effect of Significant Non-recurring Items on Reported Results For the Fourth Quarter Ended Dec. 26, 2015 Impairment of Other Non- Operating Restructuring goodwill and recurring Adjusted Income- As expenses - before TM - before expenses - Operating Segment Operating Income Reconc
Slide 21: Calculation of Adjusted EBITDA and Leverage Ratio
Valmont – Calculation of Adjusted EBITDA and Leverage Ratio Valmont – Calculation of Adjusted EBITDA and Leverage Ratio Debt Coverage Calculation Year-end 12/31/2016 Net earnings attributable to Valmont Industries, Inc. $ 173,232 Interest expense 44,409 Income tax expense 42,063 Depreciation and amo
Slide 22: Calculation of Return on Invested Capital
Valmont – Calculation of Return on Invested Capital 2016 2016 Operating income $243,504 Adjusted Operating income * $255,930 1 Effective tax rate 19.10% Adjusted effective tax rate 30.80% Tax effect on operating income (46,509) Tax effect on operating income (78,826) After-tax operating income 196,9